jimenez-piernas alberto tesi · milan kundera: the unbearable lightness of being , new york 1991,...
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AAllmmaa MMaatteerr SSttuuddiioorruumm –– UUnniivveerrssiittàà ddii BBoollooggnnaa
DOTTORATO DI RICERCA IN
Diritto Europeo
Ciclo XXIX
Settore Concorsuale di afferenza: _12 / E4_ Settore Scientifico disciplinare: _IUS / 14_
TITOLO TESI
The Role of the European Union and other International Organisations in Promoting Corporate
Social Responsibility
Presentata da: ALBERTO JIMÉNEZ-PIERNAS GARCÍA Coordinatrice Dottorato Relatore Prof.ssa Lucia Serena Rossi Prof. Marco Balboni
Esame finale anno _2016_
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To my mother,
in memoriam
To my father, my brother
and friends
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CONTENTS
Introduction 01
Chapter I: Corporate Social Responsibility at a global level 14
1.1. Globalisation and Human Rights 14
1.2. The particular problematic of economic, social and cultural rights 24
1.2.1 Context and legal evolution 24
1.2.2 Levels of States’ obligations 29
1.3. The United Nations: shaping CSR 36
1.3.1 CSR and the United Nations: a new momentum 40
1.3.2 The controversial definition of CSR 51
Chapter II: The role of international organisations: open windows 72
2.1. Bringing orderliness in the work of international organisations 72
2.1.1. Common aspects and institutional coordination of
international standards 72
2.1.2. The challenge of substantive coordination 78
2.2. CSR and international trade and investments 83
2.2.1. International investments and human rights 85
2.2.2. Screening the WTO: open windows 109
2.3. Soft law and the potential of international organisations 128
2.3.1. Soft law and corporate human rights respect 128
2.3.2. The role of international organisations 135
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Chapter III: Corporate Social Responsibility in the European Union 140
3.1. The emergence of CSR in the EU 140
3.1.1. From a limited concern ad intra to a wider
development goal 140
3.1.2. A new impulse after 2009 153
3.2. CSR: mainstreaming EU policies 156
3.2.1. Implementation of the CSR agenda: information
and promotion 158
3.2.2. Implementation of the CSR agenda: institutional and
international aspects 164
3.2.3. Implementation of the CSR agenda: impact on EU Law 174
3.3. National initiatives in the EU 182
3.3.1. Member States’ role: challenges and opportunities 182
3.3.2. National guidelines and main initiatives 195
Chapter IV: The potential of the EU’s contribution to global CSR 203
4.1. The potential of soft law in the EU 203
4.1.1. The initial guidance of the ECJ: introducing the debate 203
4.1.2. Consolidation and taxonomy of soft law in the EU 208
4.1.3. Assessment. CSR and soft law 214
4.2. Access to justice: an open question 222
4.2.1. Premises on corporate extraterritorial responsibilities 222
4.2.2. Current developments in the EU 240
4.3. The role of the EU and the post-2015 agenda 250
4.3.1. The role of the EU: some institutional remarks 251
4.3.2. Substantive contributions and the post-2015 agenda 267
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Conclusions 273
Cited Bibliography 284
International Jurisprudence 308
National Jurisprudence 313
States’ Practice: Legislation 315
States’ Practice: Policies 316
Practice of International Organisations 317
Practice of the European Union 324
List of Treaties 329
Websites 330
Index of Tables and Diagrams 332
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“When a society is rich, its people don't need to work with their hands; they can devote themselves to activities of the spirit. We have more and more universities and more and more students. If students are going to earn degrees, they've got to come up with dissertation topics. And since dissertations can be written about everything under the sun, the number of topics is infinite. Sheets of paper covered with words pile up in archives sadder than cemeteries, because no one ever visits them, not even on All Souls' Day. Culture is perishing in overproduction, in an avalanche of words, in the madness of quantity. That's why one banned book in your former country means infinitely more than the billions of words spewed out by our universities.”
Milan Kundera: The Unbearable Lightness of Being, New York
1991, Harper-Perennial, p. 105.
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Acknowledgements:
We wish to warmly thank Prof. Marco Balboni for his academic orientation, together with Prof. Lucia Serena Rossi, Director of the PhD Program in European Union Law of the University of Bologna (Italy), both of them being vital instigators and inspirators of this work. This research would not have been possible without the scholarship of the Royal College of Spain in Bologna; we particularly thank the Illustrious Members of the Patronage, H.E. Rector García Valdecasas and fellow Scholars and colleagues. We would like to further express our gratitude, for different reasons, to Prof. Pascual Vives (University of Alcalá, Madrid), Prof. Zamora Cabot (University of Castellón, Spain), Prof. Calvo Caravaca (University Carlos III, Madrid), Prof. Villán Durán (former UN officer), Prof. Domínguez Redondo (Middlesex University London), Mrs. Carmen Rosa Rueda Castañón (UN), Ms. Mara Bustelo (UN), Mr. Rio Hada (UN), Ms. Juana Sotomayor (UN), Ms. Orlagh McCann (UN), Ms. Rebaone Ferguson (UN), Mr. Josep Bosch (WTO), Dr. Andrés Rigo Sureda (IMF), and H.E. Mr. Amadeo Pérez Yáñez (Swiss Ambassador to the UN and Other International Organisations in Geneva).
All errors and omissions, however, remain the author’s sole responsibility.
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Note on Citations
Bibliographical references are made following the Continental
European style, including Latin abbreviations such as Idem (the
same), Ibíd. (the same place –if necessary indicating different
pages), op. cit. (the work cited). For the reader’s comfort footnotes
include the full bibliographical information (city, year and
publisher).
As for official documents of International Organisations,
jurisprudence, and legislation, the full reference is used when first
cited. Subsequent citations use only the official reference number
of the organisation at stake and the pages or paragraphs.
Websites were checked on 15 January 2016.
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Abbreviations
AB Appellate Body (WTO)
ACPs African, Caribbean and Pacific Group of States.
Art. Article
ATS/ATCA Alien Tort Statute / Alien Tort Claims Act
AU African Union
BIT Bilateral Investment Treaty
CCPs Central Counterparties (referred to central banks)
CELAC Community of Latin American and Caribbean Countries
CFSP Common Foreign and Security Policy (EU)
COHOM Council Working Group on Human Rights (EU)
CPR Civil and political rights
CSO Civil Society Organisation
CSR Corporate Social Responsibility
Dir. Directive
DJSI Dow Jones Sustainability Index
DSB Dispute Settlement Body (WTO)
DSU Dispute Settlement Understanding (WTO)
ECB European Central Bank
ECHR European Convention on Human Rights
ECtHR European Court of Human Rights
ECJ European Court of Justice (alternatively, CJEU, Court of Justice
of the European Union)
EIB European Investment Bank
EMAS Eco-Management and Audit Scheme
EMSF European Multi-Stakeholder Forum
EP European Parliament
ESCR Economic, social and cultural rights
EU European Union
FAO Food and Agriculture Organisation of the United Nations
FDI Foreign Direct Investment
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GATS General Agreement on Trade in Services (WTO)
GATT General Agreement on Tariffs and Trade (WTO)
GRI Global Reporting Initiative
H.E. His Excellency
HRC Human Rights Council (UN)
IBRD International Bank for Reconstruction and Development (WB)
ICC International Criminal Court
ICCPR International Covenant on Civil and Political Rights
ICESCR International Covenant on Economic, Social and Cultural Rights
ICSID International Centre for Settlement of Investment Disputes
IDA International Development Association (WB)
IFC International Finance Corporation (WB)
IFI International Financial Institutions
IHRL International Human Rights Law
IIA International Investment Agreement
IL International Law
ILC International Law Commission
ILO International Labour Organisation
IMF International Monetary Fund
IOs International Organisations
ISO International Organisation for Standardisation
MDGs Millennium Development Goals
MFN Most Favoured Nation (WTO)
MIGA Multilateral Investment Guarantee Agency (WB)
MNEs Multinational Enterprises
MoU Memorandum of Understanding
NAFTA North American Free Trade Agreement
NAP/s National Action Plan/s
NCP/s National Contact Point/s (OECD)
NGO Non-governmental Organisation
NHRI National Human Rights Institution
NRA National Regulatory Authority
OECD Organisation of Economic Co-operation and Development
OHCHR Office of the High Commissioner for Human Rights (UN)
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OMC Open Method of Coordination (EU)
PPPs Public Private Partnerships
QB Queen’s Bench Division (British judicial system)
R&D Research and Development
Reg. Regulation
Res. Resolution
SDGs 2030 United Nations Sustainable Development Goals
SMEs Small and Medium Enterprises
SPS Agreement Agreement on the Application of Sanitary and Phitosanitary
Measures (WTO)
SRI Socially Responsible Investment
TEU Treaty of the European Union
TFEU Treaty of Functioning of the European Union
TNCs Transnational Corporations
TRIPs Agreement Trade-Related Aspects of Intellectual Property Rights Agreement
(WTO)
UDHR Universal Declaration of Human Rights
UN United Nations
UNCITRAL United Nations Commission on International Trade Law
UNCTAD United Nations Conference on Trade and Development
UNESCO United Nations Educational, Scientific and Cultural Organisation
UNGPs United Nations Guiding Principles on Business and Human
Rights
UNIDROIT International Institute for the Unification of Private Law
UNPRI ‘United Nations’ Principles for Responsible Investment
WB World Bank
WG Working Group
WHO World Health Organisation
WIPO World Intellectual Property Organisation
WTO World Trade Organisation
1
INTRODUCTION
Subject of research
The international scenario has suffered many substantive changes in the last twenty-five
years. Almost a generation is born since the end of the Cold War. More precisely, the
implosion of the Soviet Union in August 1991 has drastically changed our legal,
political and economic priorities and aspirations1. Despite the relative level of
integration of the so-called international society, essentially promoted by
intergovernmental international organisations, we might admit that this integration is
still initial and partial, with the meaningful exception of the European Union (EU). At
the same time, we witness the multiplication of actors of all kinds in the international
arena, and their increasing influence due to globalisation: churches, lobbies and all kind
of companies with their diverse interests. Globalisation extends beyond the economy
and affects labour relations (global competition between workers, their international
mobility and delocalisation), communications (the expansion of the World Wide Web
and the Internet), health global crisis (due to Ebola, AIDS/HIV, H5N5 virus, to cite only
a few recent diseases), and security problems (all forms of transnational terrorism),
creating a variety of “borderless threats”2. We face a wider range of actors which,
sometimes, seem to relegate States, who historically were self-sufficient and superiorem
non recognoscens in the classic terminology, while the former dominance of “high-
politics” and the bipolar geopolitical configuration have lost prominence.
On the other hand, in legal terms and according to that traditional viewpoint, only States
and International Organisations can be considered subjects of International Law (IL)
without any doubt; however, nowadays’ world places us in an interesting crossroad: the
presence and strength of some actors, like transnational companies (TNCs), has eroded
the pre-eminence of States and Organizations on the international stage.
Simultaneously, the international agenda has also significantly changed, with the rise of
new concerns: mainly, human rights, sustainable development and the environment, in 1 It has been a far-reaching change in mentalities, on which an indispensable, in-depth and visionary analysis is the one made by the Spanish master teacher of international law, Prof. Truyol y Serra, who died in 2003. A. TRUYOL SERRA: La Sociedad Internacional, Madrid 1993, Alianza Ed., pp. 128-171. 2 A very recent state of the art: S. HAMEIRI and L. JONES: Governing Borderless Threats: Non-Traditional Security and the Politics of State Transformation, Cambridge 2015, Cambridge University Press.
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an increasingly multilateral world. Social concerns have necessarily become
international: development and human rights have emerged as strong items on the
international agenda, solidly intertwined, repeatedly calling upon private actors’
complementary role in their advancement, as confirmed by the new UN Sustainable
Development Goals for 2030 (SDGs), adopted in September 20153.
The development of international human rights law (IHRL) is, without any doubt, one
of the very few good things left by the 20th Century. Economic globalisation and the
increasing interdependency and integration of the international system give rise to a
double challenge: to make globalisation and human rights reconcilable, with a view to
minimising the adverse effects of the intense transnational economic and financial
flows. This challenge expresses itself through a particular, and usually controversial,
interaction between human rights’ enjoyment and the daily activities or operations of
transnational companies (TNCs). It is in this context that Corporate Social
Responsibility (CSR) and related notions have been born: its aim is to solve this
problem through a complex set of ‘soft law’ and ‘hard law’ instruments, which are
inspired on other classic normative components of IL and IHRL.
In this context, the concrete subject of study of this research is an analysis of the
contribution made by international organisations in promoting CSR and how their role
has changed. This consists of providing an answer to the following problematics, inter
alia: what organisations have led the way in shaping CSR; how CSR has evolved and
what are its characteristics and definition; why the role of international organisations is
crucial; what has been the EU’s role, how is it different from other IOs (both
institutionally and substantively); and if purely economic organisations got something
to say (the World Bank Group, the World Trade Organisation). In sum, what are the
open possibilities for the promotion of human rights in relation to the activities of TNCs
from an institutional perspective? We also question how CSR can be integrated within
the general regime of international protection of human rights, which ultimately leads us
to wonder if victims of corporate-related human rights’ breaches have access to justice
and under what circumstances. 3 The new SDGs, at the end of the day, “seek to realize the human rights of all”. In this development agenda, it is acknowledged that the “[p] rivate business activity, investment and innovation are major drivers of productivity, inclusive economic growth and job creations” so that the UN “call[s] upon all businesses to apply their creativity and innovation to solving sustainable development challenges”. UN (General Assembly): Resolution “Transforming our World: the 2030 Agenda for Sustainable Development”, 25 September 2015, UN Doc. A/RES/70/1, preamble and para. 67 (citations).
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Even at the risk of being a little descriptive at times, there is a lateral and instrumental
objective, but not less important: to bring order to the ever-growing documentation and
initiatives (issued by a plethora of intergovernmental and non-governmental
international organisations), so as to show, with all due caution, their relative coherence,
direction and potential. The need to bring some order is even more important in the EU,
were we face dispersed and many times apparently disconnected initiatives that start to
go beyond mere voluntariness, so usually associated to CSR. To ‘bring order’ does not
consist of repeating and summarising one more time the existing CSR standards4; it is
rather a research of common points and threads to infer eventual patterns and directions.
Of course, this study corresponds to the larger category of what could be called
“business and human rights studies”, while having a more limited scope.
At the root of our subject-matter, thus outlined, we come across three theoretical
problems that will subsequently determine our methodological approach. First of all, we
face the above-mentioned interrelation between traditional subjects of International Law
and the whole range of transnational “actors”. There is nothing to add for the moment
apart from recalling that its origin lies in globalisation and that it is not an insuperable
challenge for IL –we address it in detail in the first chapter so we avoid developing it
here.
Secondly, the sectorialisation of IL does not help us either, since it sometimes seems
that commercial or investment matters are separate from the rest of IL regimes. These
regimes have an apparently autonomous development, even with their own tribunals,
and tend to self-sufficiency, ultimately implying a risk of fragmentation. Businesses
would operate in a field while human rights would correspond to a different and
detached universe. The International Law Commission has explained that, unlike
internal orders, International Law has not clear-cut normative hierarchies but “this has
never meant that one could not, in particular cases, decide on an order of precedence
4 This work has been done by many commentators. We recommend the following states of the art and a very recent dictionary: S.M. IDOWU, N. CAPALDI, M. FIFKA, L. ZU, R. SCHMIDPETER (Eds): Dictionary of Corporate Social Responsibility. CSR, Sustainability, Ethics and Governance, Swtizerland 2015, Springer Ed; D. TÜRKER, H. TOKER and C. ALTUNTAS (Eds.): Contemporary issues in Corporate Social Responsibility, Plymouth (UK) – New York (USA) 2014, Lexington Books; B. HORRIGAN: Corporate Social Responsibility in the 21st Century. Debates, Models and Practices Across Government, Law and Business, United Kingdom 2010, Edward Elgar Publishing Ltd –the latter covers only until 2009 but is useful for some initial comments and to study the first initiatives.
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among conflicting rules”5, which “cannot be determined abstractly” and needs a case-
based and “pragmatic” stance6.
The third problem is ‘ideologisation’: ideological needs or ‘blinkers’ only push us to
disillusionment and undermines the scientific value of any study. Many human rights
activists expressed their shock in delusional and grandiloquent discourses, for example,
when the Grand Chamber of the European Court of Human Rights (ECHR) finally
approved the presence of crucifixes at public schools in Italy, to the disappointment of
many. The Court very rightly explained that, for the time being, there was “no European
consensus” 7 in this regard so it could fall under the margin of appreciation of member-
States. Activists were presumably delighted, however, when the UN Committee on
Civil and Political Rights (CCPR) impeded a French claimant, Mr Wackenheim, who
suffers from dwarfism, to freely work in circus numbers including “dwarf tossing”
(wearing a suitable protective gear), because the local authorities had banned it alleging
a breach of human dignity, to the detriment of the primary livelihood of Mr.
Wackenheim. He exhausted the French domestic remedies and unsuccessfully claimed
to the UN-CCPR8 that this ban had deprived him of his right to work and that he had
freely decided to have that work and didn’t feel his dignity violated –if we are allowed
to add it, our televisions continuously show spectacles in which to ridicule (consenting)
people is common place and human dignity and non-discrimination are more than
discussable. Of course, we only propose these examples in a thought-provoking manner,
to warn against ‘ideologisation’. Moving from anecdotes to categories, activists and a
good part of the public opinion incur in a twofold misunderstanding that leads to
delusion: they defend ideological expectations over legal limitations and they expect
international tribunals to act as constitutional courts to overcome that problem9. This is
5 INTERNATIONAL LAW COMMISSION (ILC): Fragmentation of International Law: Difficulties Arising From the Diversification and Expansion of International Law, Report of the Study Group of the International Law Commission, 13 April 2006, UN Doc. A/CN.4/L.682, para. 325 (at pp. 166-167). 6 “This reflected the pragmatic sense that some criteria are, in particular contexts, more important than others”. Ibíd. 7 “The Court concludes in the present case that the decision whether crucifixes should be present in State-school classrooms is, in principle, a matter falling within the margin of appreciation of the respondent State. Moreover, the fact that there is no European consensus on the question of the presence of religious symbols in State schools speaks in favour of that approach”. ECtHR (Grand Chamber): Lautsi and Other vs. Italy, Judgement of 18 March 2011, Application No. 30814/06, para. 70. 8 UN-CCPR: Manuel Wackenheim vs. France, Decision of 15 July 2002, Communication No. 854/1999, UN Doc. CCPR/C/75/D/854/1999 (2002). 9 In this connection, Prof. Pascual Vives concludes that the above-cited case of Lautsi should not disappoint international lawyers: “en el caso Lautsi y otros c. Italia, analizada desde el DI Público, no debe concebirse con desazón, como una laguna en la jurisprudencia del TEDH […] Todo lo contrario,
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why we have shunned ideological requirements and any kind of activism (corporate
neo-liberalism just as much as pro-human rights purism). In relation to ideological
stances, we shall add political interferences, on which it must be highlighted that –when
dealing with human rights– we always need a certain amount of political will, without
which we cannot make them work. But a purist and doctrinal study of human rights can
compromise their practical effectiveness and unduly neglect open opportunities for the
introduction of human rights’ concerns within business activities, as it will be shown.
Methodology
The methodology adopted stems from the observation of the above-mentioned problems
(international subjectivity, risk of fragmentation of IL and widespread ideologisation).
This has forced us to adopt a consensual approach to offset the problematic
ideologization and to explain the foundation and development of International Law,
since CSR is an area under development. We have further adopted an integrative stance
to overcome undesirable risks of fragmentation of IL, which is the pathology of the
unavoidable sectorialisation of IL. And a human rights-based approach is finally
needed to clarify and correctly focus CSR.
Our consensual approach is guided by pragmatism, in the already-cited words of the
ILC, when dealing with the risks of fragmentation of IL, so we give a great importance
to the gradual construction of agreements in an area, like CSR, that is clearly in its
infancy. Even though it shows promising developments, methodologically speaking, we
will keep in mind public international law principles and, in particular, how difficult but
necessary it is to reach a certain level of consensus within the international society (also
within the EU)10. Of course, the path of consensus is not necessarily easy and we do not
idealise it. It is advisable to keep being realistic and critic. Power and economic
differences between States are obvious in the world, and between States and
constituye un resultado ajustado a la naturaleza internacional del Tribunal de Estrasburgo y coherente con el papel que desarrolla la noción de consenso, entendida desde una perspectiva material, en ordenamiento jurídico internacional”. (Emphasis added). F. PASCUAL VIVES: “El margen de apreciación nacional en los tribunales regionales de derechos humanos: una aproximación consensualista”, in Anuario Español de Derecho Internacional, Vol. 29 (2013), pp. 217-262, at p. 257. 10 See, generally: J. FERRER LLORET: El consenso en el proceso de formación institucional de normas en el Derecho internacional, Barcelona 2006, Atelier Ed., passim.
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Companies, even within the European Union11. IHRL tries to prevent actions, which
could, not so long ago, be acceptable. The nineteenth century industrialisation would
now be disapproved from a human rights point of view, that is, international standards
change and evolve. For example, the abolition of slavery is, from a historical
perspective, to some extent a recent development –no need to recall the difficulties
experienced before an international consensus was reached in this regard –the US
needed a civil war. So, it will take some time to consolidate the current initiatives given
the huge and non-easily reconcilable interests at stake12. Here lies the fundamental role
of consensus in the formation of IL13.
To work towards reaching a favourable climate of opinion is an indispensable step in
the progressive development of IL. This process will determine the future of CSR: the
customary path, based on the construction of that consensus, means that all States do
not need to absolutely and unanimously agree on every single point, but still is there a
common sense of agreement to the extent States do not wish either to hinder the
development of CSR just by forcing excessively detailed negotiations, which would be
inescapable when unanimity is required or a vote is asked14.
Still on methodology, we adopt an integrative position for two reasons. First of all, our
integrative perspective is aimed at resituating CSR within the framework of IHRL,
which is its natural field according to our research. At the same time, an integrative 11 To give a recent example, Swedish Social Democrats had promoted –when in opposition– a parliamentarian initiative to recognise Western Sahara independence. Morocco then blocked the opening of the first IKEA store (in Casablanca) scheduled for October 2015. Once in office, Social Democrats have finally changed their mind abandoning their initiative, as reported by the press. See: A. TAYLOR: Ikea may have stumbled into one of North Africa’s most intractable land disputes”, in Washington Post, 29 September 2015, available at https://www.washingtonpost.com/news/worldviews/wp/2015/09/29/ikea-may-have-stumbled-into-one-of-north-africas-most-intractable-land-disputes/ (last accessed date: 24 October 2015). Also refer to the recent decision adopted by Sweden at the Spanish journal El País as reported by Reuters: “Suecia renuncia a reconocer al Sáhara tras el bloqueo marroquí a Ikea”, El País, 18 January 2016, available at: http://internacional.elpais.com/internacional/2016/01/18/actualidad/1453119823_900989.html -last accessed date 19 January 2016). 12 As it is eloquently said in a theatrical work by Jacinto Benavente (1866-1954), a Spanish writer very critical of the bourgeoisie –his own social class: “we’ve created many bonds of interest, and it’s in everyone interest to rescue us”. To put it crudely, it can be said that it is in the interest of capitalism to find out how business and human rights can be compatible and to develop an international agreement in that direction. A bilingual (English-Spanish) edition of this theatrical work: J. BENAVENTE: The Bonds of Interest – Los intereses creados (Edited and translated by Stanley Appelbaum), New York 2004, Dover Publications, p. 75 (quote). 13 C. JIMENEZ PIERNAS : “El derecho internacional contemporáneo: una aproximación consensualista”, XXXVII Curso de Derecho Internacional, Washington 2011, Organización de Estados Americanos, 64 pp., at pp. 27-31. 14 A. CASSESE: “Consensus and some of its pitfalls”, in Rivista Italiana di Diritto Internazionale, No. 58 (1975), pp. 754-761, at p. 755.
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stance is needed to recall that international economic law, IHRL, and any other sector,
all are within general international law and do not function in a vacuum. Just as we
resituate CSR within human rights law, we resituate international economic law within
general international law.
This integrative perspective therefore insists on the risks of fragmentation of IL, on
which we now shall add a few words. For instance, we have already stated, against
fragmentation, that there are not watertight law-fields excluding each other.
Sectorialisation is the necessary result of the specialisation of diverse legal fields due to
the complexity of international activities, in line with globalisation trends, being also a
result of regionalisation15. Fragmentation is the undesirable consequence of
sectorialisation. According to the ILC, it is difficult and problematic to establish an
aprioristic and abstract hierarchy within IL, but as said before, this does not mean it is a
totum revolutum. Nor does it mean that there are absolutely self-contained regimes. IL
has a “relational character”: “[i] f lawyers feel unable to deal with this complexity, this
is not a reflection of problems in their ‘tool-box’ but in their imagination about how to
use it”16. More concretely, the fact of being a lex specialis is not a passe-partout to
disregard other specific regimes (human rights) or general international law, provided
the specific case requires it and that it is done accordingly with the general principles of
IL (for example, in good faith). Imagination is needed besides reasonable and
technically-feasible goals, therefore rejecting maximalist stances and wishful thinking
that, in fact, reflect ideological exigencies.
Of course there are superior interests of the ‘international society’, sometimes
recognised through treaties and, in general, as a decanting process based on an
international consensus that has to be the result of combining a extensive and consistent
praxis with an opinio iuris –which in turn can be global or only regional. However, it
seems to us too optimistic to say that all human rights have reached the status of erga
omnes obligations; perhaps a limited range of its core elements have (like slavery or,
less probably, torture), but insufficient to address the problematic interaction between
15 S. SALINAS ALCEGA and C. TIRADO ROBLES: Adaptabilidad y fragmentación del derecho internacional: la crisis de la sectorialización, Zaragoza 1999, Real Instituto Elcano Ed., pp. 215-228. 16 ILC: Fragmentation of International Law…, op. cit., UN Doc. A/CN.4/L.682, para. 222 (at pp. 114-115).
8
business and human rights, which is much wider in its casuistry17. Again, pragmatism is
advisable to overcome the fact that “idealist hopes are as exaggerated as the fears of
realists”18.
We therefore stick to the relational character of international norms and to the
widespread idea that fragmentation and strict ‘self-contained regimes’ are not in line
with IL principles19. This explains the reasoning in two steps that gives substance to
many of our conclusions when studying the dialectic between business and human
rights: we first investigate what role might general international law play and, at a
second stage, what role human rights can reasonably play. This is particularly important
in the area of international trade and investments.
Leaving aside our consensual and integrative methodological approach, in more general
terms, we must be aware of the gap between norms and reality, which is not only an IL
problem since it happens at an internal level as well. In this sense, a mere formal
analysis of the existing norms, with their different value, would constitute a deductive
exercise of idealism, which seems to be out of touch with the material dimensions of a
frequently problematic reality. A formal vision tends to forget the interests at stake, both
social and political, which have also an influence on the gradual creation of any
normative framework (like CSR).
This is why, in summary, we also propose an interdisciplinary approach, a method able
to cover, as Weber says, what it “ought to be” and “what it is”, to the degree legal
processes are also socio-historical phenomena20. This research has an underlying
Weberian foundation; even in what Weber himself was reluctant to explicitly accept
17 For some authors, it is not unreasonable to place human rights obligations somewhere hierarchically superior in the international legal order. In our view, this rather reflects wishful thinking than a reality rebus sic stantibus. See, generally: E. De WET and J. VIDMAR (Eds.): Hierarchy in International Law: the Place of Human Rights, Oxford 2012, Oxford University Press. 18 C.J. TAMS: Enforcing Obligations Erga Omnes in International Law, Cambridge 2007, Cambridge University Press, p. 309. 19 For a good state of the art and the basic bibliography therein, see: M.A. YOUNG: Regime Interaction in International Law. Facing Fragmentation, Cambridge 2012, Cambridge University Press. 20 An example of this idea is provided by Prof. Skouteris, from the American University in Cairo: “In trying to assess legal relationships the jurist cannot avoid the methodological conundrums of contemporary history. The fact that the object of study is ‘law’ does not mean that legal technique alone can provide an answer. […] Knowledge of state intent is intertwined with various other parameters, such as security and power, that cannot be dissected from the question of intent”. T. SKOUTERIS: “Engaging History in International Law”, in J.M. BENEYTO, D. KENNEDY (Eds.) and J. CORTI VARELA, J. HASKELL (Assistant Eds.): New Approaches to International Law. The European and the American Experiences, The Hague 2012, Springer Ed., pp. 99-121, at pp. 114-115.
9
such as the relationship between politics and science, which we tangentially address
when dealing with technical requirements and the ‘expertisation’ of policies (in areas
like new technologies, food security, pharmaceutical regulation, etc.). According to the
sensible comments of Raymond Aron, the more Max Weber insisted on the
incompatibility between politics and science, the more he made clear his awareness of
the tight links between both areas21. The same thing happens in the link between law
and politics, given the strength of the concept of legitimacy in this thinker. We fully
share the idea that legitimations, whatever they may be, are the glue that makes States
work and self-sustain in time, based on a legal power characterised by its ordinary and
impersonal character22.
The interdisciplinarity of this research forces us to make various references to
transversal problems like development or governance (weak regimes, poverty, etc.),
together with occasional incursions into other fields of knowledge (from the philosophy
of language to company law or criminal and civil law23). This interdisciplinary
perspective arises from the belief that there is a need to connect and relate problems
rather than isolate questions, in order to link ideas and include social as well as political,
legal and economic aspects when facing a problem. This reveals to be indispensable as
far as the most striking global troubles are a result of an increasingly complex mixture
of factors and causes.
The international system is more and more complex and ‘complete’ in its daily
attributes and manifestations; the international system itself is in search of legitimations
to sustain the power relations upon which it is built. In this vein, if future developments
confirm that –as it seems so far– the legal formation of CSR is based on an ever-
growing consensus, this fact will provide it with a source of legitimacy in the future
accordingly to a sociological approach to IL. As Norberto Bobbio remarked in his
comments on Weber, a “pattern of legality” is not “self-sufficient” and needs an
21 “Repitió continuamente que las virtudes del político son incompatibles con las del hombre de ciencia; pero su preocupación por separar ambas actividades no era más aguda que su conciencia del vínculo que entre ellas existe”. Introduction of Raymond Aron to the Spanish edition of M. WEBER: El político y el científico, Madrid 1967, Alianza Ed., p. 10. 22 This construction led to the famous definition of the “legitimate monopoly over the use of violence within a recognized and bounded territory”. M. WEBER: Economy and Society, Vol. 2 (Edited by Guenther Roth and Claus Wittich), Berkeley 1978, University of California Press, pp. 904-905. 23 In those cases we usually make reference to a problematic that opens the door to a different law-field, but we refrain from adopting a stance or providing any answer. Nevertheless, we have considered it interesting to leave some open questions in neighbouring law-fields.
10
“ulterior criterion”, for example, consensus, which is a potent source of legitimacy
(among other possibilities)24.
Norms sometimes derive from international practice, following an empirical and
inductive path according to the sociological grounds of law; but in other occasions, it is
also possible that some established practices are the product of and obey some previous
normative ideals, in a deductive way. All in all, the vertical axis operates in both
directions in the international order, combining empirical-inductive and logical-
deductive processes25. This applies to CSR: in certain occasions, it will respond to pre-
existing ideal requirements and, most of the time, it will be a reaction to the continued
experience in the field and ‘societal expectations’. Law is frequently one step behind
social developments and we are therefore closer to a sociological formation of
International Law. This research is peppered with cases involving TNCs and human
rights violations, whose objective is precisely to keep in touch with reality, the material
dimension of law, which alternatively challenges or confirms norms.
There are always logical imperfections in any legal order we examine; also internal
legal orders are far from perfect in terms of compliance and enforcement. Imperfections
are everywhere and the international society does not escape criticism (or even attracts
it more than States). Internationally speaking, we live in a societas full of contrasting
interests, perhaps with some traits of a very imperfect communitas. It is first of all for
practical reasons that we use the term “international society”, which is in our view the
most appropriate description of the current status of world politics26. In the view of
Vitoria (1483-1546) a community should have a vocation to perfection and be
teleological and morally based, but as pointed out in the following century by Suárez
(1548-1617), this is –in modern words– similar to a mathematical function or curve that
tends toward a point without never fully reaching it; not even States themselves really
achieve a perfect level of integration based on the common good27. Without entering
24 “Weber muestra claramente que no considera autosuficiente la pauta de la legalidad y, por tanto, estima necesario recurrir a un criterio ulterior, el cual puede ser el acuerdo entre intereses (el criterio del consenso […] ”, N. BOBBIO: Teoría general de la política, Madrid 2003, Ed. Trotta (Edition by Michelangelo Bovero; translation by A. de Cabo and G. Pisarello), p. 171. 25 C. JIMENEZ PIERNAS: Introducción al derecho internacional público. Práctica de España y de la Unión Europea, Madrid 2011, Tecnos Ed., pp. 50 and 65-66. 26 It is an international society, “in its way” to become a community, in the words of Prof. del Arenal: C. del ARENAL: Introducción a las Relaciones Internacionales, Madrid 2007, Tecnos Ed., p. 414. 27 “Lo que califica, pues, a una sociedad política como completa o perfecta es su “sibi sufficientia”, esto es contar con los medios materiales, institucionales y organizativos precisos para lograr el conjunto de
11
into the full debate on to what extent there are shared values and its degree of
integration, we rather think that we are still far away from living in an ‘international
community’ in terms of shared objectives and ethics28.
This is a merely practical decision as far as we understand that, in terms of the
international normative structure, most of our work will remain in the field of
international organisations at an institutional level, also when dealing with States’
practice. This thesis has a primarily institutional perspective because we put the
institutional dimension of norms and practice first, sometimes before analysing its
substantive aspects, since this is the most adequate way to proceed in the field of
international organisations and when analysing their normative production29.
International organisations (IOs) have mainly institutionalised international cooperation,
which is a non-negligible role, while being an important channel through which IL has
undergone substantive changes30. CSR is just another example that shows an open path,
in which we further analyse the dialectic between treaty law and customary law in the
development of IL.
Sources
In line with the previous methodological considerations, the main sources are logically
the practice of the different international organisations at a global level, with a strong
emphasis on the European Union at a regional level, without isolating them from each
other so as to allow a rigorous and complete investigation. As said before, this
comprises the practice of some EU member-States that have put in place proper CSR
policies and, au-fur-et-à-mesure, we include lateral comments on the most prominent
condiciones sociales que permitan y favorezcan al pleno desarrollo de las personas, en que consiste el bien común. Ahora bien, como observa clarividentemente Suárez, tal auto-suficiencia nunca fue absoluta, ni siquiera en su época, en el momento de eclosión del Estado moderno […] ”. F. SÁNCHEZ-APELLANIZ VALDERRAMA: “Naturaleza y caracteres de la soberanía permanente sobre los recursos naturales”, in VVAA: Liber Amicorum. Colección de estudios jurídicos en homenaje al Prof. Dr. D. José Pérez Montero, Vol. III, Oviedo 1988, Universidad de Oviedo, pp. 1305-1328, at p. 1320. 28 In line with our arguments, the following pages summarise this debate: E. BARBÉ: Relaciones Internacionales, Madrid 2011, Tecnos Ed., pp. 131-135. 29 “En este ámbito del Derecho Internacional prima la dimensión institucional de las normas y de la práctica antes que la sustantiva”, O. CASANOVAS and A.J. RODRIGO: Compendio de Derecho Internacional Público, Madrid 2015, Tecnos Ed., p. 170. 30 J.A. PASTOR RIDRUEJO: Curso de Derecho Internacional Público y Organizaciones Internacionales, Madrid 2011, Tecnos Ed., p. 659.
12
private-led initiatives born under the auspices of IOs (the Equator Principles, the Global
Compact, the Global Reporting Initiatives, the Dow Jones Sustainability Index, ISO
26000, etc.).
This international and institutional focus does not mean that States’ practice is less
important. On the contrary, States’ practice is a crucial source of International Law, but
our institutional perspective is precisely justified to the extent international institutions
are functioning as chemical accelerators of States’ initiatives. Nevertheless, in the
particular context of the European Union, we will also analyse the most prominent
national action plans together with some cutting-edge legislative changes in order to
further comment on the importance of their mere existence with regard to the customary
path –even regardless of the effectiveness of their contents.
Besides the multiplication of institutional initiatives, literature on CSR is vast and
disparate. We lack of systematic studies that clarify the current statu quo and the future
possibilities from a scientific and neutral perspective. Most of the initial information at
an academic level is found in specialised reviews rather than monographies, excluding
some prominent examples, due to the fact that we focus on quite recent developments.
For good or bad, a 2013-monography can be obsolete by 2015. For this reason, and due
to the ever-growing number of commentators, codes, leaflets, essays, press news, etc.,
we have had to be mercilessly selective with the bibliography and include only the most
representative authors and schools of thought.
We intersperse the practice of IOs and States (official documents, legislation and soft
instruments) with the incipient jurisprudence in this area, particularly advanced in the
US, the UK and Netherlands. Selected cases of national and international courts have a
double value: its typical interest as an application of IL, but also a potential recognition
of incipient customary practices. It goes without saying that doctrine will serve to
compare CSR to other law-fields and to contextualise it within general international law
and within EU Law. Some studies de lege ferenda will also be useful, but more rarely
used since we wish, above all, to conduct a realistic research. Everything together can
help us see the wood, not just the trees. We are not the ones to predict the future of
CSR, yet everything suggests that it came to stay.
13
Plan of work
The key actors in the origin and development of CSR are international organisations
(IOs): mainly, the United Nations (UN), the Organisation for Economic Co-operation
and Development (OECD), the International Labour Organisation (ILO). At a regional
level, the European Union quickly took over and is now leading the way. Therefore, our
first chapter is focused on the UN initiatives, aimed at systematising them rather than
repeating their contents. Some core CSR debates are addressed en passant: the
differential characteristics of CSR, its related concepts (due diligence, legal personality,
grievance mechanisms), its legal composition (hard and soft law), the legal options to
operationalise it (a new treaty, the customary path or what we call the Europeans’ third
way), and the policy options to support it (national actions plans alongside the
institutional context).
At the end of the first chapter, we propose a definition of Corporate Social
Responsibility based on the international practice surveyed. The definition proposed is
supported throughout our research in view of IOs and States’ practice. On this basis,
Chapter II is consecrated to the assessment of the existing possibilities to mainstream
human rights into trade and investment issues, while arguing that IOs start to go all in
the same direction, in line with an increasing institutional coordination that already
delivers some substantive results.
The second part of this research focuses on the European contribution to global CSR.
Chapter III is aimed at bringing order into widely dispersed initiatives within the EU;
this reveals to be absolutely necessary because the available scientific literature usually
forgets to look at the same time at various law-fields (public procurement, corporate
governance, the environment, etc.). In this sense, one of the difficulties of CSR in the
EU is that, more than a separate policy, it has a strong crosscutting character. On the
whole, it shows the “predilection of the European Union to receive international norms
with open arms”, introduce substantive improvements and then “upload EU law and
legal policy preferences into the international legal development process”31. This will
help us analyse in the last chapter the potential contribution of the EU to global CSR.
31 N. SINGH GHALEIGH: “Iterative Engagements. The European Union and International Normativity”, in Proceedings of the Annual Meeting, American Society of International Law, Vol. 104 (March 24-27 2010), pp. 572-576, at p. 575.
14
CHAPTER I
Corporate Social Responsibility at a global level
1.1 Globalisation and Human Rights
‘Business and human rights’ studies owe their growth to a double development,
accentuated in the second half of the 20th Century: the parallel expansion of
globalisation and human rights.
Without a doubt, International Human Rights Law (IHRL) is one of the best legacies of
the last century. This even more so, since it has not been a particularly enthusing or
inspiring period. Moreover, human rights have managed to evolve and overcome their
inherent original sin, according to Hannah Arendt’s critique: its paradoxical origin
linked to nationalisms in the end of the 18th Century and the 19th Century, when the
recognition of such rights was based on the exclusion of non-citizens32. Political rights
and human rights were firmly united until the latter emancipated themselves.
Interestingly, only later, the socially marginalised and politically excluded became the
priority of human rights, their raison d’être.
This positive evolution has continued with the proliferation of multilateral human rights
treaties, ranging from general issues (civil and political rights, economic and social
ones, both of 1966), to very specific subjects such as racial discrimination (1966), the
rights of the child (1989) or Apartheid in sports (1985), under the auspices of the United
Nations (UN). The most recent multilateral human rights treaty dates 2006 on the rights
of persons with disabilities. There has been a similar progress at a regional level, with
instruments like the Inter-American Convention on Human Rights (1969), the African
Charter on Human and Peoples’ Rights (1981) and the European Convention for the
Protection of Human Rights and Fundamental Freedoms (1950).
The human rights language has clearly penetrated the social tissue and media,
sometimes giving rise to misperceptions under which it seems that there are more and
32 “The whole question of human rights, therefore, was quickly and inextricably blended with the question of national emancipation”. H. ARENDT: The Origins of Totalitarianism (Part II: Imperialism), New York 1968 (Vol. II), Harcourt Ed., p. 171.
15
more rights. In our view, the multiplication of international instruments should not be
read in terms of more rights, but as a progressive specification of these. The basic
misunderstanding lies in the fact that procedural aspects are mistaken for the rights at
stake: for example, the protection of cultural heritage, which has an increasing number
of specific treaties under the umbrella of the UN Educational, Scientific and Cultural
Organisation (UNESCO), has not leaded to new rights; it has detailed the contents of
the right to culture and the means to achieve it under an already existing human right –
article 15 of the International Covenant on Economic, Social and Cultural Rights
(ICESCR). The separation between cultural heritage and cultural rights under the
ICESCR is simply incorrect: its specificity might justify the existence of particular
treaties, the UN agency and specialised monitoring bodies, keeping however in mind
that cultural heritage is only a tool. Cultural heritage could be defined as “cultural
resources”33 without which we would deprive “the right to take part in cultural life” of
content. Similarly, the so-called ‘gay rights’ do not exist: they are only a desirable
aspect to be added to the general prohibition of discrimination. We could think of many
other examples. It seems to us to be legal common sense not to deprive the ICESCR of
content just because of the new challenges caused by globalisation and multinational
enterprises (MNEs). If we accept artificial separations between different human rights
sectors, we would just contribute to slide down the slippery slope to a fragmentation of
IL, against which we warned in the introduction34.
In other words, we face the increasing complexity of different human rights’
dimensions, not new rights disconnected from the general regime set out in IHRL,
which has to provide us with the contextualisation of any problematic, in our case, the
interaction between transnational companies (TNCs) and human rights. It is therefore
important to note that we do not defend the existence of new rights and responsibilities,
and we even see it risky to adopt such stance; we rather defend the full implementation
of already existing instruments and, if necessary, procedural advances and a progressive
but realistic interpretation to facilitate their effectiveness. This is connected to the on- 33 M. BIDAULT: La protection internationale des droits culturels, Louvain 2009, Université Catholique de Louvain - Ed. Bruylant, pp. 431-435. Also F. Francioni, from the Florence European University Institute, has supported interpretations in the light of general principles of international law when he considered the UNESCO Convention for the safeguarding of the intangible cultural heritage, in relation to other human rights instruments: F. FRANCIONI: “La protección del patrimonio cultural a la luz de los principios de derecho internacional público”, in VA: La protección jurídico internacional del Patrimonio Cultural, Especial referencia a España, Madrid 2009, Colex Ed., p. 32. 34 On the risks of fragmentation against the so-called ‘self-contained regimes’ in International Law, also refer to: C. JIMENEZ PIERNAS: op. cit., pp. 56-58.
16
going debate on the need for adopting a new international instrument on business and
human rights, which we will study in our assessment of soft international law and the
effectiveness and usefulness of the current human rights’ regime dependent on
international treaties35. Corporate Social Responsibility (hereinafter CSR) was born out
of this intersection between business and human rights.
Of course, many voices still critically rise that we are dealing with the eternal problem
of legal moralism, within the framework of H.L.A. Hart’s polemic triangle constituted
by law, liberty and morality: delegalize morals or demoralize law?36 Transposing this
analysis to the international arena, social morality takes the form of an international
ordre public, in which we place human rights principles. In any case, moral
responsibilities and political responsibilities are more and more “inextricable” in a
global age37. Notwithstanding the fact that human rights clearly entail some sort of
ethics (and it would be cynical not to admit it38), some critiques also seem exaggerated
as far as there is a margin of appreciation to comply with the treaties so as to adapt their
requirements to a variety of cultural, economic and political particularities, not to
mention the concept of ‘progressive realization’ studied in the following section on
ESCR.
To continue with our previous examples: article 15 ICESCR on the right to culture does
not imply at all that access to culture shall be free, but available and accessible; it
happens the same with article 12 ICESCR on the right to health –these services do not
necessarily need to be delivered by the State through public institutions without any
cost, even though it should be available and accessible regardless of its ownership and
management39; nor the principle of non-discrimination obliges any State to adopt
legislation allowing “gay marriage” –provided there is no unlawful discrimination with
respect to LGTB people.
35 See below Chapter II, Section 3. 36 M. A. RAMIRO: “A vueltas con el moralismo legal” (Prologue) in H.L.A. HART: Derecho, libertad y moralidad (translation of M. A. RAMIRO), Madrid 2006, Dykinson Ed., pp. 9-88, passim. 37 “[D]ebates in international relations between those advocating for international morality and those denying it have become theoretically sterile”, R. BEARDSWORTH: “From Moral to Political Responsibility in a Globalised Age”, in Ethics and International Affairs, Vol. 29 No. 1, 2015, pp. 71-92, at p. 74. 38 As Amartya Sen pronounced: “human rights are quintessentially ethical articulations”, primarily an “ethical demand” that, later on, can have algo secondary legal articulations. A. SEN: “Elements of a Theory of Human Rights”, in Philosophy and Public Affairs, Vol. 32 No. 4, 2004, pp. 315-356, at p. 321. 39 OHCHR: Frequently Asked Questions on Economic, Social and Cultural Rights, Fact Sheet No. 33, Geneva 2008, United Nations, p. 20.
17
Behind the critics’ reasoning we find the usual allegations of Western paternalism and
imperialism through human rights. If we accept the thesis of continuity according to
which there were no significant changes despite the fall of the Berlin Wall, we might be
tempted to maintain a bipolar discourse, converted into a North-South dialectic that
many authors support since the 1990s to keep up a “tale of two worlds: core and
periphery”40 –in economic terms. Nothing substantial would have changed and human
rights would have become a new ‘soft power’ strategy to keep on subjugating less
developed countries, following Nye’s terminology. Of course, the North-South narrative
might be partly true; also, some current international conflicts can perfectly be studied
under the continuity thesis (the recent crisis in Ukraine or US-Russia opposing views on
Siria’s war). However, the maintenance –with its adaptations– of a binary discourse
seems to oversimplify some important changes and many other factors that have to be
added since the end of the Cold War in a rather multipolar scenario, far from the ‘end of
history’ in the famous Fukuyama’s expression. This discussion only reflects our
difficulty to “introduce discontinuities into history” in increasingly complex scenarios
with a good amount of “chaos”41.
Accusations of imperialism against human rights also seem exaggerated taking into
account, for example, the widely disseminated Millennium Development Goals42, an
agenda aimed at increasing human rights respect and economic development, with eight
objectives that should have been accomplished before 2015: eradicate extreme poverty
and hunger, achieve universal primary education, promote gender equality and empower
women, reduce child mortality, improve maternal health, combat HIV/AIDS malaria
and other diseases, ensure environmental sustainability and promote global partnerships
40 Immediately after the collapse of the Soviet Block, a part of the academia supported the maintenance of a bipolar discourse, changed into a North-South dichotomy, allowed a partial salvation of political realism within less developed countries: “We thus tell the tale of two worlds of international politics in the post-cold war era. In the core, economic interdependence, political democracy […] In the periphery, however, […] interdependence between peripheral States is subordinate to dependence on core States. […] structural realism is inadequate to explain the behaviour of states in the core but is relevant for understanding regional security systems in the periphery”. J. M. GOLDGEIER and M. McFAUL: “A Tale of Two Worlds: Core and Periphery in the Post-Cold War Era”, in International Organization, Vol. 46 No. 2, Spring 1992, pp. 467-491, at pp. 469-470. 41 J. L. GADDIS: “International Relations Theory and the End of the Cold War”, in International Security, Vol. 17 No. 3 (Winter 1992-1993), pp. 5-58, at p. 52. Also see: J.E. CRONIN: The World the Cold War Made: Order, Chaos and the Return of History, New York 1996, Routledge Ed., passim. (xii+332pp) 42 Following to two Resolutions of the General Assembly in 2000: UNITED NATIONS: United Nations Millennium Declaration, Resolution adopted on 8th September 2000 (8th plenary meeting), New-York, 18th September 2000, UN Doc. A/RES/55/2, and the Follow-up to the outcome of the Millennium Summit, UN Doc. A/RES/55/162.
18
for development. These objectives, which don’t seem particularly imperialistic, have
been partially achieved, apparently with good “reason[s] to celebrate”43, since extreme
poverty and the proportion of under-nourished people have both been reduced by half,
net enrolment rates in primary education have significantly increased in developing
countries and gaps between women and men steadily narrow, among other encouraging
signs. In this sense, we shall note that the mixture between human rights and economic
development generated the concept of sustainable human development upon which is
built the UN strategy. It must be underlined to what extent the new millennium has
inaugurated an utterly useful and unprecedented approach: that link between human
rights and economic development, very distant from previous morally-idealistic western
defences of human rights –which where precisely an easy target for criticism.
In sum, we dare say that most societies embrace human rights as a natural and desirable
development, despite the eventual critiques and political nuances. The adoption of the
human rights’ language includes almost all transnational actors; for example, the
Catholic Church, with 1200 million believers, has revived its “social doctrine” at the
end of the 20th Century –born at the end of the 19th Cent. with the Encyclical Letter
Rerum Novarum (Pope Leo XIII). Even H.H. Pope John Paul II expressed that a “type
of development which did not respect and promote human rights –personal and social,
economic and political, including the rights of nations and of peoples –would not be
really worthy of man”44. H. H. Pope Francis now includes explicit human rights’
concerns in very modern terms, as recently expressed with regard to the environment
and the “right to water”45 or, in more general terms, when it is acknowledged that “[i]n
the present condition of global society, where injustices abound and growing numbers
of people are deprived of basic human rights and considered expendable, the principle
of the common good immediately becomes, logically and inevitably, a summons to
solidarity and a preferential option for the poorest of our brothers and sisters”46. In any
case, one cannot but acknowledge that States’ obligations are gradually tougher in this
regard, with mixed results, and that societies have generally accepted this as a positive
evolution. 43 UNITED NATIONS: The Millennium Development Goals Report 2015, New York 2015, p. 4. 44 Encyclical Letter, Sollicitudo Rei Socialis (30 December 1987), 33: AAS 80 (1988), 557. 45 “Yet access to safe drinkable water is a basic and universal human right, since it is essential to human survival and, as such, is a condition for the exercise of other human rights”, advancing in their interdependence. Encyclical Letter, Laudato si –On Care of our Common Home (14 May 2015), para. 30 (p.23). 46 Ibíd., para. 158 (p. 117).
19
In 2000, when the UN launched the 2015’ development agenda, it already recognised
the importance of partnerships to foster human rights and involve all actors of society
by giving “greater opportunities to the private sector, non-governmental organisations
and civil society, in general, to contribute to the realization of the Organization’s goals
and programmes”47. This is the international reflection of a wider process: State-centric
approaches are less self-sufficient than expected in a theoretically Westphalian system,
and it is more and more necessary to see the links between the State and society, which
could be regarded as two systems within a “metasystem”48, still relatively autonomous
but more and more intertwined, also at an international level. It should be noted by the
way that threats to the above-mentioned State-centric Westphalian system are numerous
and do not only derive from TNCs’ activities and globalisation: also international
human rights law has meant nothing more and nothing less than the gradual recognition
of a partial legal subjectivity of individuals in the international scenario. International
human rights law has also contributed to limit States’ sovereignty: internal violations of
human rights can no longer be considered as merely internal affairs within the domestic
jurisdiction49.
Parallel to the development of human rights, globalisation50 has rapidly consolidated to
further weaken the traditional concept of States’ sovereignty. This was already a central
problem of scientific literature in 194951:
“This ‘global’ era has made every region sensitive to the developments of far-distant lands; moreover its ‘popular’ base has changed the decisive forces in
47 UN Doc. A/RES/55/2, para. 30. 48 “En realidad, se trata de un nuevo planteamiento del problema clásico de las relaciones entre el Estado y la sociedad que, en términos de abstracción sistémica, podría expresarse de la siguiente manera: el sistema estatal y el sistema social, sin perjuicio de su respectiva autonomía, son partes de un metasistema, es decir, hay que considerarlos desde la perspectiva de un sistema más amplio en el que cada uno de los términos sirve a finalidades complementarias y posee cualidades y principios estructurales igualmente complementarios”. M. GARCÍA-PELAYO: Las transformaciones del Estado contemporáneo, Madrid 1995, Alianza Ed., p. 25. 49 In this case, we rather refer to an evolving practice within the international society, under which internal violations of human rights meet with the increasing disapproval at an international level. Naturally, this is a controversial issue, because article 2.7 of the UN Charter consecrates the principle of non-interference in domestic affairs, even though that practice has progressively developed the Charter in this particular aspect. J. SALMON (Dir.) : « Ingérence» and « Devoir d’ingérence », in Dictionnaire de Droit International Public, Bruxelles 2001, Bruylant Ed., pp. 579-580. 50 We are not interested in the conceptual and historical debate; we shall only note that Nye and Keohane focus on the interdependency between States and societies, as said before, while Hirschmann calls it a ‘vulnerable dependency’. A general reference at: J.C. PEREIRA (Coord.): Diccionario de Relaciones Internacionales y Política Exterior, Barcelona 2008, Ariel Ed., pp. 431-435. We want to thank Prof. Pereira for his academic orientation and support. 51 S. NEUMANN: “The International Civil War”, in World Politics, Vol. 1 No. 3 (April 1949), pp. 333-350, at p. 335.
20
the conduct of international affairs. The time-honored concept, since Ranke’s day, of the ‘primacy of foreign affairs’ defining the internal natural and needs of the nations, has been increasingly replaced […] The frontiers between internal affairs and world politics –despite neat differentiations by the academicians– are irreparably blurred. This change calls for a new ‘international relations’, the outer contours of which are only dimly recognised. All fundamental concepts such as nationalism, sovereignty, intervention must be redefined”.
In the dawn of the new millennium, the UN General Assembly explicitly considered the
interdependence between human rights, development and globalisation. International
Organisations and its Member States had to be more proactive leaving room to the
“private sector, non-governmental organizations and civil society in general […] to
offset the negative economic and social consequences of globalisation”52. This
statement marks the official recognition that global capitalism is not an ever-progressing
and zero-sum phenomenon: there are advantages and opportunities alongside shortfalls
and negative side-effects that need to be addressed53. This process has deepened the
imbalances and tensions between States’ power, markets’ influence and societal
expectations, while increasing their interdependency and the unavoidability of
multilateral approaches to tackle the adverse impacts of globalisation. CSR can
contribute to alleviate these tensions as a complementary tool; the following diagram
shows, by the way, that societal expectations do not only create tensions in relation to
the markets, but also in relation to States’ power54, forming an isosceles triangle.
52 UNITED NATIONS (General Assembly): Role of the United Nations in promoting development in the context of globalisation and interdependence, Resolution of 20 December 2001, New-York 22 February 2001, UN Doc. A/RES/55/212, para. 9. 53 J. MARCHÁN: “La responsabilidad de los Estados en la protección de los derechos económicos, sociales y culturales ante la globalización”, in J. SOROETA LICERAS (Dir.): Los derechos económicos, sociales y culturales en tiempos de crisis –Cursos de Derechos Humanos de Donostia-San Sebastián Volumen XII, Pamplona 2012, Aranzadi Ed. (Thompson Reuters), pp. 79-106. 54 IHRL is, in origin, a way to alleviate the tension between societal expectations and States’ power, limiting the latter to a precise framework. It was traditionally assumed that States were the major –and, at a time, almost the only- human rights’ violators so the historically most important tension was between States and Societal Expectations. Globalisation has added new tensions creating the above triangle. In the words of Prof. Carrillo Salcedo, the government’s treatment of its own nationals is no longer an “internal matter”, but has become a concern under contemporary international law: “si el trato que un Estado diera a sus nacionales era en el derecho internacional tradicional un cuestión de jurisdicción interna (ya que el Derecho internacional no regía esta cuestión y se limitaba a regular la posición jurídica de los extranjeros), en el Derecho Internacional contemporáneo ocurre lo contrario como consecuencia de […] los derechos humanos”. J.A. CARRILLO SALCEDO: Soberanía de los Estados y Derechos Humanos en Derecho Internacional Contemporáneo, Madrid 1995, Tecnos Ed., p. 19.
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Diagram No. 1: The place of CSR in relation to the tensions of globalisation
A few figures can illustrate the current situation. The four major Chinese banks top the
famous Forbes 2000 list, but they are under public control. As a properly private
company, the biggest one in the world is an investment services enterprise founded in
1955 under the control of CEO Warren Buffet: Berkshire Hathaway, with $ 19’9 billion
in profits, exceeding the GDP of 85 countries in the world (individually taken, not
aggregated)55. We find it more enlightening to look at profits, instead of assets
(sometimes difficult to liquid), sales (before costs, taxes, etc.) or market value
(generally variable), in order to get a better idea of the power and influence of TNCs. To
take another source, Fortune also publishes the Global 500 list, according to which
Apple is the biggest company in terms of profits, amounting to $ 39’51 billion in
201456, over the GDP of 103 countries the same year. Walmart is also an off-cited
example: it has 2,200,000 employees, only a little less than the population of the
metropolitan area of Las Vegas (2,293,610 inhabitants), and more than the population of
the metropolitan areas of European capitals like Prague (1,910,396) or Stockholm
(2.018208)57.
TNCs’ impact on society is undiscussable, sometimes dramatically as we periodically
witness corporate scandals: the environmental and human disaster in Bhopal by Union
Carbide (1984), the ecological tragedy of Exxon Valdez in Alaska (1989), the labour
55 We are using the latest list published by Forbes (http://www.forbes.com/global2000/list) and data from the World Bank for the World’s GDP in 2014 (World Development Indicators Database, World Bank, 18 September 2015, available at: http://data.worldbank.org/data-catalog/world-development-indicators http://data.worldbank.org/data-catalog/world-development-indicators). 56 See: http://fortune.com/fortune500. 57 For the most recent data on the population of these cities see the OECD Statistics at: http://stats.oecd.org/Index.aspx?Datasetcode=CITIES# and EUROSTAT Regional Yearbook (2015, Chapter 15 on European Cities), available at: http://ec.europa.eu/eurostat/web/cities/publications.
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scandal in Nike’s subcontractors in Vietnam and Indonesia –including child labour–
since it was revealed in 1996-97; the French biggest oil company corruption case (Elf
Aquitaine, 1994); the financial frauds of Enron (2001), WorldCom (2002), Lehman
Brothers (2008); Tyco in 2002-2003 when a former CEO had stolen more than $100
million leading to a class action of defrauded shareholders; the $14 billion black-hole in
the Italian milk-processing company Parmalat, discovered in 2003 (the so-called
“Europe’s Enron”); also in 2003, the Dutch retailer company Ahold –number three in
the world– admitted to have inflated the benefits; Pfizer’s allegedly illegal drug trials in
Nigeria (1996) that led to John Le Carré’s novel (and subsequent film) The Constant
Gardener; and BP’s oil spill in the gulf of Mexico back in 2010, to quote only a few
examples with great media impact. The latest scandal occurs as we write these words:
the alleged fraud in diesel motors’ emissions within the German Volkswagen Group
(2015).
In spite of all, globalisation should not be the scapegoat for all the international deficits
in the area of human rights and development. The opportunities that TNCs can create in
developing countries are equally undeniable, in particular, when the exploitation of
resources depends on the availability of heavy investments. Of course, the pros and
cons of TNCs and global capitalism seem to generate an unstable or precarious
equilibrium. The UN ESCR Committee has pointed out that, even though recent
developments are not necessarily a threat to the provisions of the Covenant, it is equally
true that, taken together and without the complement of appropriate policies,
globalisation carries risks that need to be tackled in order to maintain the prevalence of
human rights and avoid a regression in their indivisibility and interdependency58.
By their nature, markets are simply amoral. Again, the Cold War created a sort of
competitive dynamic between the two blocks; Western countries came up with the
brilliant idea of the ‘social market economy’. We can speculate as to what extent the
presence of the soviet system served to maintain a healthy tension within capitalist
countries to continually demonstrate that they were better than communists, something
that became unnecessary after the fall of the Berlin Wall. Capitalism had no competition
anymore. Corporate practices and standards slackened. In our view, this constitutes a
58 ESCR Committee: Statement on Globalisation and Economic, Social and Cultural Rights, May 1998, UN-Doc. E/1999/22-E/C.12/1998/26, para. 3. For a further development in the area of ESCR, please refer to the following section of this chapter.
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crucial factor to explain the current problems –of course, together with other concurring
causes. Even George Soros (not at all a dangerous communist) warns on the amorality
of markets while societies cannot work “without some distinctions between right and
wrong”59. Nobel Prize Joseph Stiglitz also thinks that it is possible to “make
globalization work”: even though there are no ‘one-size fits-all solutions’, a teleological
interpretation of the current regulatory scenario might help. Particularly shocking is the
abuse of “limited responsibility” when it comes to make TNCs accountable: this figure
was actually created to allow and promote investments, without which “modern
capitalism” wouldn’t have grown as we know it, so that its purpose was not to release
director and managers from any liability for business operations60. But Stiglitz finally
states that “[o]ne thing that makes [him] hopeful is the corporate social responsibility
movement”61. This influence of TNCs is strong, being more an economic reality than a
clear-cut legal entity62, and a new balance needs to be found within the international
society.
In sum, the problematic is clear: to make globalisation and human rights compatible and
the contribution of CSR in this dialectic. Our first conclusion (and premise) is that we
do not believe there is any ontological incompatibility between globalisation and human
rights. In fact, implicit and dogmatic ontological incompatibilities are, in our view,
behind many conflictual misunderstandings in international relations: suffice the Arab
Spring to demonstrate that Islam and democracy are not necessarily antagonistic
59 G. SOROS: Globalizzazione, Milano 2002, Ponte Alle Grazie Ed., p. 19 (“La società non può funzionare senza qualche distinzione fra giusto e sbagliato”). The original English edition is: G. SOROS: On Globalization, London-New York 2002, Public Affairs Ed., 208 pp. 60 “Making matters worse is limited liability, which essentially defines corporations. Limited liability is an important legal innovation, and without it modern capitalism surely could not have developed. Investors in corporations with limited liability are at risk for only the amount of money they invested in the company, and no more. [p. 193][…] Limited liability has a major advantage: it allows huge amounts of capital to be raised, since each investor knows that the most he can lose is his investment. But limited liability can have large costs for society [p. 194] […] Limited liability was intended to limitd the liability of investors, not to absolve employees, however senior, of responsibility. But, as we have seen, sometimes that is the result [p. 203] […] Limited liability has underpinned the growth of modern capitalism; but with globalisation the abuses of limited liability have become global in scale; without the reforms suggested here, they could become far worse” (p. 210). J.E. STIGLITZ: Making Globalization Work, New York – London 2006, WW Norton Ed., pp. 193-194, 203 and 210 (extracted quotes above). 61 Ibíd., p. 210. 61 Ibíd., p. 210. 62 “Se le impresse multinazionali sono riuscite a orientare le scelte politice ed economiche degli Stati, diventa ora necessario trovare all’interno della Comunità Internazionale un accordo che permetta di tenere a freno le leve della globalizzazione economica, con un sistema di valori autenticamente condiviso e un più rigido controllo. In ogni caso, è necessario sottolineare sin d’ora che l’espressione società o impressa multinaionale o anche gruppo multinazionale identifica una realtà economica molto più che una entità giuridica”. F. BORGIA: La responsabilità sociale delle impresse multinazionali, Napoli 2007, Ed. Scientifica, pp. 20-21.
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concepts. A dogmatic and monocultural understanding of democracy is, of course,
incompatible with a dogmatic and monocultural understanding of Islam, as it would
probably happen with any pair of abstract notions. A concept is a unity of knowledge
useful to describe complex ideas and, if possible, improve the world around us. A too
stringent, unidirectional and short-sighted interpretation of terms like democracy,
human rights, development, or globalisation can give the erroneous perception that they
are incompatible with each other. In this vein, to make compatible globalisation and
human rights means to “narrow and ultimately bridge the [governance] gaps […]
created by globalisation”63, following the wording of the Special Representative of the
Secretary-General (SRSG) John Ruggie.
1.2 The particular problematic of Economic, Social and Cultural Rights
1.2.1. Context and legal evolution
Transnational companies’ activities mostly affect Economic, social and cultural rights
(ESCR) rather than civil and political ones (CPR), with the exception of the problems
derived from private security, freedom of expression and, very importantly, access to
justice64. But civil and political rights’ violations in cases involving TNCs are almost
always related to concomitant economic and social rights. ESCR have faced a number
of challenges that have marked their legal evolution up to date, when they have
managed to be consolidated in the corpus of international human rights law. This
process deserves to be evaluated to the extent it illustrates the frame difficulties of
ESCR and shall be kept in mind when we deal afterwards with more specific business-
related issues. Suffice the following considerations to point out that, in our view, the
main responsibilities remain with States, either to promote the effectiveness of human
rights treaties, either to prosecute third party violations.
63 HUMAN RIGHTS COUNCIL (UN): Protect, Respect and Remedy: a Framework for Business and Human Rights, Report of the SRSG on the issue of human rights and transnational corporations and other business enterprises John Ruggie, UN Doc. A/HRC/8/5, 7 April 2008, para. 3. 64 Access to justice is studied in the second part of this work. See Chapter IV, Section 2.
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The human rights division in three generations, a very extended and divulgated idea,
was proposed by the French lawyer Karel Vasak in 197765. This division helped those
interested in marginalising ESCR to “decaffeinate” them, in which cultural rights were
clearly the Cinderella of the party66. Such a generational division is controversial and
very problematic as it suggests a hierarchy or, at least, an underlying order of
precedence67. The alleged second generation, ESCR, was largely considered as a group
of rights manly conducive to positive obligations even though, later, it has been verified
that both civil and political rights and ESCR entail positive and negative obligations for
States. The conflict between the Western bloc and the Soviet system during the Cold
War led, in sum, to the redaction in 1966 of two different and separated International
Covenants, what generated some confusion tending to forget that this distinction had its
origin in the political equilibria of that time without legal basis to be maintained later
on, as it has been reflected in a good part of the academia since the 1990’s68. The most
important juridical consequence was the discrimination between civil and political
rights and ESCR in their respective legal protection, both internally and internationally:
while CPR had a protection mechanism including individual complaints (first Optional
Protocol of the 1966 CPR Covenant), the same mechanism hasn’t been achieved for
ESCR until 2013.
This line of argument was confirmed in 1993 on the occasion of the World Conference
on Human Rights celebrated in Vienna, where was established the “universality,
indivisibility, interdependence and interrelation” of all human rights69. The indivisibility
and interdependence became fundamental principles of international human rights law,
added to older ones such as the inherent dignity of human being, participation and
equality, and non-discrimination.
65 K. VASAK: “A Thirty Year Struggle: The Sustained Efforts to give Force of Law to the UDHR” en UNESCO Courier, Nov. 1977, p. 29. 66 “Cultural Rights are the failed Cinderella of the international human rights lexicon –pretty to picture but they don’t quite make it to the ball”: D. McGOLDRICK: “Culture, Cultures and Cultural Rights”, in M. A. BADERIN and R. McCORQUODALE (Dirs.): Economic, Social and Cultural Rights in Action, Oxford 2007, Oxford University Press, p. 447. 67 C. FLINTERMAN: “Three Generation of Human Rights”, in J. BERTING et al. (Eds.): Human Rights in a Pluralist World: Individuals and Collectivities, London 1990, pp. 75-77. 68 Western opposition to ESCR during the Cold War is, in any case, discussable and probably there are not definitive answers. A good summary of this debate in: A. KIRKUP and T. EVANS: “The Myth of Western Opposition to Economic, Social and Cultural Rights? A reply to Whelan and Donnelly”, in Human Rights Quarterly, Vol. XXXI (2009), John Hopkins University Press, pp. 221-238. 69 Vienna Declaration and Program of Action, Part I, parr. 5, adopted by the (second) World Conference on human rights, Vienna, June 25th 1993, UN-Doc. A/CONF.157/24 (Part I, Chap. III).
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It should be recalled that the consolidation in Vienna of the doctrine of the indivisibility
and interdependence of human rights was not a spontaneous occurrence, but the
synthesis of several antecedents, in particular two previous texts. First of all, the Tehran
Declaration (1968), following to the first World Conference on Human Rights, already
expressed in quite modern words: “Since human rights and fundamental freedoms are
indivisible, the full realization of civil and political rights without the enjoyment of
economic, social and cultural rights is impossible” 70.
Secondly, a decade after, the same idea was reinforced with a General Assembly
resolution: “a) All human rights and fundamental freedoms are indivisible and
interdependent; equal attention and urgent consideration should be given to the
implementation, promotion and protection of both civil and political, and economic,
social and cultural rights; b)the full realization of civil and political rights without the
enjoyment of economic, social and cultural rights is impossible; the achievement of
lasting progress in the implementation of human rights is dependent upon sound and
effective national and international policies of economic and social development” 71.
In the eighties, the Declaration on the Right to Development (1986) continued in the
same direction and, finally, the already cited Vienna Conference in 1993 definitively
consolidated the indivisibility and interdependency of human rights, only when the
dissolution of the Soviet bloc had finished.
When the former Human Rights Commission was replaced by the Human Rights
Council, in place since March 2006, the United Nations insisted again in the
universality of all human rights, including the right to development and confirming a
wider level of consensus generali in this regard72.
This said, the international society, and especially developed States, continue to give a
preferential treatment to CPR despite the fact that the right to life has little sense if it is
not through, among other rights, the right to health, to adequate food or to adequate
housing.
70 Tehran Declaration, Final Document of the World Conference on human rights, Tehran, May 13th 1968, UN-Doc. A/CONF.32/41, para. 13. 71 Resolution of the General Assembly 32/130, of 16 December 1977, on the “Alternative approaches and ways and mean within the United Nations system for improving the effective enjoyment of human rights and fundamental freedoms”, para. 1, a) and b). 72 UN-Doc. A/RES/60/251, April 3rd 2006, preamble, para. 3.
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The core challenge is to convince developed States that both CPR and ESCR and the
right to development imply negative and positive obligations so that there aren’t
cheaper or more expensive rights and, in particular, that ESCR aren’t always more
expensive than CPR.
In the post-cold war era, globalisation, the growth of a deregulating capitalism, together
with privatisation enthusiasms, are the current challenges for ESCR, which continue to
lack of sufficient support, as it is the case of the United States Senate whose ratification
of the ESCR Covenant is still pending. The proliferation of non-State international
actors, such as transnational companies, that usually have a bigger factual power than
many States, is a proof of the new challenges for ESCR as stated in the previous
section.
In effect, though the progression has been notable, ESCR still suffer some historical
delay derived from their initial marginalisation within the family of human rights.
It is plausible to consider that the second major milestone since the Vienna Conference
came twenty years later when, the 5th of February 2013, Uruguay became the tenth
country to ratify the Optional Protocol of the ESCR Covenant, following the example of
Argentina, Bolivia, Bosnia and Herzegovina, Ecuador, El Salvador, Mongolia, Portugal,
Slovakia and Spain73. The entrance into force of the Optional Protocol, beyond its
symbolic importance, opens the possibility to advance in the justiciability of economic,
social and cultural rights as it allows individual complaints and ex officio investigations
by the ESCR Committee.
Another factor that has influenced the delay of ESCR is vagueness and the voluntarism
or programmatic character of many texts dealing with this category of rights, in which
we often find a mixture of references to socio-economic development and to its
progressive nature. A standard critique is that we move, in this sense, somewhere
between rights and politics.
Within the framework of the 1997 discussions on the reform of the United Nations, the
second Interagency Workshop was convoked for 2003. With the title: “Statement on a
Common Understanding of a Human Rights-Based Approach to Development
73 OHCHR News Press, February 7th 2013, available at: http://acnudh.org/2013/02/pillay-celebra-avance-que-permitira-la-presentacion-de-quejas-individuales-en-relacion-con-los-derechos-economicos-sociales-y-culturales/
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Cooperation”, the so-called Stamford Principles74 were born, intending to react to old
critiques by ESCR sceptics and simplify its framework. It was decided that some
principles had to be clear and two wordings had an instant success: the human rights-
based approach and human rights mainstreaming, which are both extremely useful to
study the role of international organisations to promote human rights amongst private
companies.
Those principles included the synthesis of half a century of work and, again, insisted on
the progress made in Vienna: universality, inalienability, indivisibility, interdependency
and interrelation between all human rights; together with the principles of non-
discrimination and equality, participation and inclusion, and the accountability in the
context of the rule of law.
This evolution of ESCR has founded the approach to development programs and good
practices among public and private entities, also in relation to the Millennium
Development Goals. It consists of a linguistic and conceptual shift75 in the initiatives
undertaken, above all aimed at implementing effectively the Vienna Conference,
promoting the coherence of the huge variety of specialised organisms within the UN
decentralised system, and inspiring other international organisations. For instance, there
are improvements to be noted in the development of ESCR, persisting some delay in
their justiciability, yet many States still consider there is more room for their margin of
appreciation with ESCR than with CPR76, what can hold back the States demands to
transnational companies.
74 The common understanding reached three principles: “1. All programmes of development cooperation, policies and technical assistance should further the realization of human rights as laid down in the Universal Declaration of Human Rights and other international human rights instruments. 2. Human rights standards contained in, and principles derived from, the Universal Declaration of Human Rights and other international human rights instruments guide all development cooperation and programming in all sectors and in all phases of the programming process. 3. Development cooperation contributes to the development of the capacities of “duty-bearers” to meet their obligations and of “right-holders” to claim their rights.” OHCHR: Frequently-asked questions on a human rights-based approach to development cooperation, New York and Geneva 2006, Annex II (Stamford Principles), p. 42. Available at: http://www.ohchr.org/documents/publications/faqen.pdf 75 “The debate regarding human rights based development has necessitated both a conceptual and language shift. This debate has benefited from advances made in asserting the legitimacy of socio-economic rights but has suffered also from some of the skepticism and resistance that has impeded the realization of socio-economic rights and been a feature, for example, of the debate on an Optional Protocol to the ICESCR”. P. TWOMEY: “Human Rights-Based Approaches to Development: Towards Accountability”, in M. A. BADERIN y R. McCORQUODALE (Dirs.): op. cit., p. 69. 76 J.A. PASTOR RIDRUEJO: “Sobre la universalidad del derecho internacional de los derechos humanos”, en Anuario de Derechos Humanos. Nueva Época, Vol. XII (2011), Universidad Complutense de Madrid, pp. 267-286. In English: T.A. O’DONNELL: “The Margin of Appreciation Doctrine:
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1.2.2. Levels of States’ obligations
In line with article 103 of the United Nations Charter, we consider the pre-eminence of
this organisation at an international level is clear, reason why we give this relative
importance to the UN practice in terms of human rights. In parallel with their legal
evolution and recognition, ESCR have generated levels of State obligation that we take
as a benchmark.
In view of the historical delay in the field of ESCR, it is only since the eighties of the
last century that a significant clarification of State obligations starts. All scientific
literature agrees with the importance of three crucial moments: Limburg Principles of
1986, the General Comment No. 3 of the ESCR Committee on the nature of State
parties obligations (1990) and the Maastricht Guidelines (1997).
The experts meeting in the University of Limburg in 1986 insisted again on the benefits
of the indivisibility doctrine at a moment when the international system was still divided
into two blocs, so that they took the precaution to explain that “[t]here is no single road
to their full realization. Successes and failures have been registered in both market and
non-market economies, in both centralised and decentralised political structures”.77
The most important conclusion is the proposal of an interpretation of articles 2 to 5 and
8 of the ESCR Covenant, aimed at clarifying their programmatic and progressive
character without giving carte blanche to exempt States from their obligations. It was
recalled that, in any case, the Vienna Convention on the Law of Treaties (1969)
establishes that provisions contained in a treaty have to be interpreted in good faith in
line with the object and purpose of the treaty (checking, if necessary, the preparatory
work of the treaty).78
Standards in the Jurisprudence of the European Court of Human Rights”, Human Rights Quarterly, Vol. IV (1982), John Hopkins University Press, pp. 474-496. A more recent revision after the end of the Cold War: J.A. SWEENEY: Margins of Appreciation: “Cultural Relativity and the European Court of Human Rights in the Post-Cold War Era”, The International and Comparative Law Quarterly, Vol LIV No. 2 (2005), pp. 459-474. 77 OHCHR: Economic, Social and Cultural Rights, handbook for National Human Rights Institutions, United Nations, New York and Geneva 2005, Annex 6 (Limburg Principles), pp. 125-135, para. 6 (of the Limburg Principles). 78 It is the principle “pacta sunt servanda” in arts. 26 and 31 of the Vienna Convention on the Law of Treaties, 1969.
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Part of the wording of the ESCR Covenant can be problematic or vague. The merit of
the Limburg Principles was to finally adjust its interpretation to real basic objectives: 79
- - Progressive realization could not justify inaction or disengagement from the State to
postpone sine die the satisfaction of a right included in the Covenant;
- - The efforts to the “maximum extent of available resources” should be understood as
including international cooperation, justifying assignments of resources in the most
efficient way to comply with “minimum obligations” and provide with “essential
services”;
- - “non discrimination” should be effective in order to avoid any case of indirect
discrimination; the adoption of measures “by all appropriate means” is understood for
this group of experts in a broader sense going beyond legislative initiatives.
The Limburg principles were extremely useful for the ESCR Committee during the
preparation of the General Comment No. 3 to delimitate State obligations, that is, the
problem of art. 2.1 of the Covenant, that didn’t give any tip on how the Committee
should decide whether if a State had allocated or not enough resources to ESCR, that is
to say, if ESCR budget was efficient and sufficient. This delicate work crystallised in
1990 with the adoption of General Comment No. 3, reflecting four years later the
experts’ conclusions in Limburg.
The obligation to adopt measures by all appropriate means includes any kind of
initiative, not only legislative. According to the terminology of the International Law
Commission, it implies obligations of result and obligations of conduct or behaviour.
Among the legislative measures, a classical example is the free choice of the State to
decide if the Covenant is transposed in the internal legal order or if it is not following a
monist perspective, regardless of the fact that specific regulations can be adopted for
particular rights. Nothing forces the States to prefer a way or another in the application
of Covenant and both options can lead to the satisfaction or to the violation of the
treaty80. Whether the Covenant is transposed or not, it does not determine the likelihood
of compliance, as it happens with almost any other measures at non-legislative levels.
79 Limburg Principles, para. 16 to 41. 80 ESCR Committee: General Comment No. 9, UN-Doc. E/C.12/1998/, para. 8. However, the ESCR Committe had already expressed a preference and recommended States to transpose the Covenant and adopt specific internal legislation (General Comment No. 3, para. 3). A transposition of the Covenant and the adoption of internal legislation would facilitate access to justice and remedies at a domestic level.
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All measures under art. 2.1 are subject to a certain margin of appreciation of States, as
admitted by the Committee81, to determine the most adequate measures to face its
specific circumstances.
This being so, the real obligation is to prove an active commitment in every field
(legislative, budgetary and political) in a way that leads to effective measures, in a
reasonability framework, to generate the expected and desirable results according to the
object and purpose of the Covenant. Guidelines on social corporate responsibility are
part of the policy makers’ effort to comply with the State obligation to promote the full
realisation of human rights; the Committee recurrently emphasizes in a number of
Country reports that the adoption of legislation at an internal level isn’t either sufficient
for the full realisation of ESCR.
To evaluate the design and adoption of such measures we encounter two problematic
concepts, as we have said above: the progressive realisation and the maximum available
resources. The gradual achievement of ESCR shows, in summary, the wish of the State
to comply with its obligation of results.
The ESCR Committee has recognised that the progressive approach reflects the
acknowledgement of a diverse material reality and of important inequalities in practice
within the international society. This shouldn’t be interpreted in the wrong direction; its
only purpose is to have a necessary flexibility device available for the variety of
difficulties that a State can experience to ensure the full effectivity of ESCR82.
To disentangle if progressivity is correctly applied in a concrete case according to the
terms of the Covenant we have two limits: on one side, inaction or disengagement of the
State, which does not need any further explanation and cannot be justified under
progressivity criteria. On the other side, eventual regressive measures aren’t either
acceptable. In fact, the ESCR Committee has very clearly established that regressive
measures constitute prima facie a violation of the Covenant and only have a justification
if a close and sound analysis of all best alternatives has been undertaken.83
81 ESCR Committee: General Comment No. 14, UN-Doc. E/C.12/2000/4 (on the right to health), para. 53. 82 ESCR Committee: General Comment No. 3, para. 9. 83 Ibíd., even though the Committee expressed more strongly the same idea in the General Comment No. 13 (UN-Doc. E/C.12/1999/10, on the right to education, para. 45): “If any deliberately retrogressive measures are taken, the State party has the burden of proving that they have been introduced after the most careful consideration of all alternatives and that they are fully justified by reference to the totality of
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The evaluation of the alternatives brings us back to the problem of “all available
resources”. The Committee has avoided complex economic and financial debates. To
avoid the fact that budgetary restrictions became a licence to violate the Covenant (by
an act or omission –with regressive measures, for example), the ESCR Committee
stipulated that the maximum available resources had to be read in a broader sense
including the potential benefits of international cooperation84.
The Committee believes that States cannot allege in any case lack of resources to
undermine two kinds of inevitable commitments: 1) basic minimum obligations or
“minimum essential levels of each right enshrined in the Covenant” 85; and “immediate
obligations”, among which non-discrimination, the adoption of measures (regardless of
their nature), and refrain from interfering or impeding the enjoyment of these rights86.
If we recapitulate the practice of the ESCR Committee, the evaluation of adequate
measures remains in a triangle whose apexes are: a) all available resources including
international cooperation; b) basic minimum obligations; and c) immediate obligations.
This did not discourage the Committee, on very few occasions, to comparing allocated
resources within a budget, regretting the usual disproportion between the financial
resources of military expenses and health or education87.
Politically speaking, the bad use or abuse of resources may seem evident; however, to
demonstrate this fact is an extremely difficult and delicate task from a legal point of
view. The Committee adopts in this regard all possible precautions as far as it is the
primarily entrusted body with the task of clarifying the provisions of the Covenant.
Corruption and hypertrophic military budgets are common, especially in countries
where transnational companies face most of their problems. Some help is provided in
the 2007 Declaration on the assessment of available resources when the Committee for
example did not include generalised corruption cases despite the opportunity to do so88.
the rights provided for in the Covenant and in the context of the full use of the State party’s maximum available resources”. 84 ESCR Committee: General Comment No. 3, para. 13. 85 Ibíd., para. 10. 86 Ibíd., para. 1 and 2. 87 M. SSENYONJO: op. cit., p. 64. 88 The statement entitled “An evaluation of the obligations to take steps to the “maximum available resources” under an optional protocol to the Covenant”, presents some criteria applicable if the State alleges lack of resources: “a) the country’s level of development; b) the severity of the alleged breach, in particular whether the situation concerned the enjoyment of the minimum core content of the Covenant; c)the country’s current economic situation, in particular whether the country was undergoing a period of
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The control of ESCR has also been improved through indicators, an effort undertaken in
conjunction with different organisations: the Office of the High Commissioner for
Human Rights (OHCHR) and other decentralised organisms of the UN system:
UNAIDS, UNICEF, UNESCO, etc., indicators than can give an effective idea of the
situation in a country.
In 1991 the Special Rapporteur Danilo Türk for the realisation of economic social and
cultural rights, appointed by the former Sub-Commission on Prevention of
Discrimination and Protection of Minorities, presented eight principles derived from the
Limburg ones and inspired in the General Comment No. 3. Danilo Türk’s report89
encouraged to pay close attention to the use of all available resources to attain the full
realisation of human rights. He equally stated that States have the obligation to
guarantee the respect of minimum core obligations, irrespective of any budgetary
constraint. As for our debate on business and human rights, it is interesting from his
report that the State’s commitment should not stagnate at an international level, but
permeate into society, through public institutions from top to bottom including national
and local entities and private organisms.
A new improvement towards the clarification of State’s obligations came in 1997
with a second experts meeting in Maastricht, which culminated in the Guidelines on
Violations of Economic, Social and Cultural Rights, where we already find mentions to
the new challenges in the post-Cold War era. Obligations of result and conduct were
included, as well as violations through acts and omissions, the margin of appreciation,
the minimum core obligations and non-discrimination. The ESCR has so far written
General Comments to clarify immediate effects and core obligations with respect to
every right of the Covenant.
After Maastricht’s experts meeting, we have to highlight the tripartite organisation
of States’ obligations, as if they were three components that help us measure the level of
compliance of the Covenant. The final terms of this tripartite division of State duties
followed Eide’s proposal, who used the verbs “to respect, protect and fulfil” (or satisfy).
economic recession; d) the existence of other serious claims on the State party’s limited resources; for example, resulting from a recent natural disaster or from recent internal or international armed conflict; e) whether the State party had sought to identify low-cost options and, f) whether the State party had sought cooperation and assistance or rejected offers of resources from the international community for the purposes of implementing the provisions of the Covenant without sufficient reason”. UN-Doc. E/C.12/2007/1, May 10th 2007, para. 10. 89 UN-Doc. E/CN.4/Sub.2/1991/17, para. 52.
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a) The respect means a distant attitude from the State, refraining from obstructing
or interfering in the enjoyment of the rights, narrowly linked to the freedom of action
and the immediate obligations analysed above (such as non-discrimination).
b) The obligation to protect attaches a more active role to the State to guarantee the
enjoyment of the rights, in front of eventual acts or activities that might threaten them,
accomplished by individuals, non-State actors like companies or agents under the public
authority. This protection operates through the implementation of policies, legislation,
regulatory frameworks and effective legal protection with inspections and all pertinent
implementation mechanisms. If a States fails to protect human rights in front of
transnational companies operations in its territory, from contracts and investments up to
the concrete activities in the field, it might also constitute a violation of the Covenant
according to this evolution of UN practice.
c) The third level usually eclipses the previous ones: “to fulfil” consists of adopting
all necessary measures for the full realisation of ESCR and, in particular, for those
persons who are not able to achieve it by their own means. This fulfilment has, in turn,
another three phases: to facilitate, to promote and to provide, even though it has been
wrongly interpreted in a maximalist conception. Far from obliging States to provide all
goods and services free of charge, in reality, it rather implies that obligation only when
individual lack of resources or during a crisis, as in general terms in would only oblige
to comply with minimum core obligations, to make them accessible and affordable
towards their progressive realisation.
Finally, the three general level of State obligations (to respect, protect and fulfil), as
well as the minimum core obligations and the immediate effects of the Covenant are all
dependent upon fundamental and transversal characteristics that help us finish this
general picture on the levels of State obligation. As we observe the evolving practice of
UN human rights bodies we have assisted to the authorised explanation of the
Committee, who has drawn an analytical framework for each right. The Committee
started with the right to housing, as for which some assessment factor were established
such as habitability, bearable costs, legal certainty and an adequate place90.
In 1999 this process was accelerated thanks to the important work of the Special
Procedures of the Human Rights Council, more politically flexible compared to the
treaty bodies (the Committees) or to the secretariat itself (the OHCHR). The Special
90 ESCR Committee: General Comment No. 4 (on the right to adequate housing), UN-Doc. E/1992/23, para. 8.
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Rapporteur on the right to education at that time, Katarina Tomasevski, particularly
helped in the generalisation of these factors, which gained accuracy calling them
“fundamental characteristics” 91.
This work went on in the same direction with the right to food, adding some
specificities of that mandate as adequacy, for example, intended to include its nutritional
richness, and the concept of sustainability was added92.
Back to the ESCR Committee, in 1999 these fundamental interrelated characteristics
were defined and, as we have said for the work of the Special Procedures, it was also
working on the right to education that the terminology was cleaned up and the
interrelated and essential features93 were extended to any right covered by the Covenant.
As for accessibility, two different aspects were separated: its physical dimension
and the economic one (called “affordability”). The essential contribution was that the
interrelated essential characteristics of all rights of the Covenant illustrated the
minimum core obligations of each right, the adoption of measures, the levels of respect,
protection and fulfilment.
The “4-A scheme” suffered some slight variations depending on the subject, but
could be summarised as follows:
-cultural acceptability, for example, drinking water might be healthy but has to be
culturally acceptable (colour or smell);
-adequacy, referring to its quality according to the needs of society;
-accessibility is, therefore, physical (available without discrimination); and
economical (affordability, as the Covenant does not oblige to provide rights free of
charge). Accessibility also means access to information94, to the decision making
process and access to justice and remedies, what is particularly important in cases
involving transnational companies.
-adaptability and sustainability, to make compatible economic development and
social rights.
On a global scale, the work of the UN human rights system has, in the last twenty
years, clarified the different levels of state obligations in terms of ESCR, in general and
91 Originally known as the “4 A Scheme”, initially integrated by availability, accessibility, acceptability and adaptability. UN-Doc. E/CN.4/1999/49, para. 50. 92 ESCR Committee: General Comment No. 12 (on the right to adequate food), UN-Doc. E/C.12/1999/5, para. 7 and 8. 93 ESCR Committee: General Comment No. 13 (on the right to education, cited above), para. 6, 7 and 50. 94 The first time accessibility included information was for the right to health. See General Comment No. 14, para. 12 and 35.
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specifically for each right. In the light of the practice of the United Nations, we have
analysed a terminology that has finally been accepted95 as authorised criteria to establish
State obligations in ESCR. The general levels of State obligations have to illustrate and
intersperse our study of the interaction between human rights and transnational
companies.
1.3 The United Nations: shaping CSR
Corporate Social Responsibility is an interdisciplinary area under development and the
current research will be far from constituting the last word. Our study is not aimed
either at repeating and summarising the diverse instruments issued by international
organisations96; instead, we would like to bring some order into a widely dispersed
documentation, starting with the UN framework and principles, the definition of CSR
and the systematisation of its contents. Some historical studies show that, under diverse
labels, CSR has somehow existed for a longer time than expected: precedents can be
traced back to the early 20th Century97. Politically speaking, the debate is evident as to
the role of social concerns within the diverse understandings of a ‘free market
economy’. From a legal perspective, the debate is further complicated by some blocking
dichotomies, mainly: hard law vs. soft law (and in connection to this, mandatory or
voluntary schemes), rights vs. duties, and the issue of objects vs. subjects of
International Law. Depending on the approach to these opposing terms, the word
‘responsibility’ will acquire a different meaning.
95 ESCR Committe: General Comment No. 15 (on the right to water and sanitation), UN-Doc. E/C.12/2001/11, parr. 53. Even other UN Treaty Bodies have included it; as a mere example: Committee on the right of the Child, General Comment No. 4, 2004, parr. 40 and 41, where the ESCR Committee is explicitly cited, or within the Special Procedures, the Guiding Principles on extreme poverty and human rights, by the Special Rapporteur on extreme poverty, UN-Doc A/HRC/21/39, “4-A scheme” cited referring to education (parr. 88.c). 96 Chronological and detailed summaries and analyses have been done by most of the authors cited in this section. We therefore omit detailed summaries of the documentation as it would add nothing new. The most authoritative texts are those of Jennifer Zerk, Bryan Horrigan, Surya Deva, David Bilchitz, Radu Mares, Doug Cassel and John Knox, together with John Ruggie’s diverse publications (footnotes below) and OHCHR’s reports. 97 In her PhD thesis, still one of the most comprehensive (and cited) studies on international CSR, Jennifer Zerk notes some precedents: in 1914, Henry Ford adopted an eight-hour working day when the usual one was nine hours; and in 1935 Johnson and Johnson published what could be considered the first ‘internal code’ to define the companies’ relations with a variety of social groups. See J.A. ZERK: Multinationals and Corporate Social Responsibility. Limitations and Opportunities in International Law, Cambridge 2006, Cambridge University Press, pp. 15-16.
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It comes as no surprise that the definition itself is controversial and there are a lot of
expressions that approximately refer to the same concept: corporate social performance,
social value creation or shared social value, corporate philanthropy, business ethics,
corporate citizenship, corporate sustainability, best practices, responsible business
conduct, etc. Definitions have been proposed by both public and privates actors. In 2001
the European Commission (EC) considered it was the “concept whereby companies
integrate social and environmental concerns in their business operations and in their
interaction with their stakeholders on a voluntary basis”98; ten years later, the EC
proclaimed it had simply become the “responsibility of enterprises for their impacts on
society”99, which seems stricter than the precedent definition. The OECD speaks of the
“private efforts to define and implement responsible business conduct”100; for the
OECD, responsible business conduct “entails above all complying with laws, such as
those on human rights, environmental protection, labour relations and financial
accountability, even where these are poorly enforced […] [and] responding to societal
expectations communicated by channels other than the law, e.g. inter-governmental
organisations, within the workplace, by local communities and trade unions, or via the
press”101. The OECD further clarifies that “[p] rivate voluntary initiatives addressing
this latter aspect of R[esponsible] B[usiness] C[onduct] are often referred to as
corporate social responsibility”102. For the UN CSR is just defined as “the corporate
responsibility to respect human rights”103. The diversity of definitions is clearly the first
difficulty for one who approaches CSR without previous information.
There are also a number of business initiatives with their own definitions. At an early
stage, a group of leading TNCs created the Business Leaders Initiative on Human
Rights104, which functioned between 2003 and 2009 and already incorporated a human
98 COM (2001) 366 Final, 18 July 2001, Green Paper promoting a European framework for Corporate Social Responsibility, para. 20 (at p. 6). 99 COM (2011) 671 Final, 25 October 2011: A Renewed EU Strategy 2011-14 for Corporate Social Responsibility, p. 6 (para. 3.1). The documentation of the European Union (EU) is studied in detail in chapters III and IV. 100 OECD: Guidelines for Multinational Enterprises, Paris 2011, OECD Publishing, p. 15 (para. 7 of the Preface). 101 OECD: Policy Framework for Investment User’s Toolkit, Paris 2011, OECD Publishing, Chapter VII, p. 2. The most recent edition dates 2015 but omits this clarification of “responsible business conduct” (2015 edition available at http://www.oecd.org/investment/toolkit/) 102 Ibíd. 103 UN Doc. A/HRC/8/5, para. 9. 104 This group ceased activities in 2009 when it considered that practical ways to introduce human rights respect into business practice were already clear and work had to move from definition to practice.
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rights’ perspective that, as we will argue, came to stay. But, at the beginning, most
private initiatives tended to avoid a strong human rights’ language. For example, the
private-led World Business Council for Sustainable Development defines CSR as “the
continuing commitment […] to behave ethically and contribute to economic
development while improving the quality of life of the workforce and their families as
well as of the local community and society at large” 105. The Global Reporting Initiative
(GRI), also private106, tends to focus on sustainability and economic development.
Non-profit and non-Governmental Organizations (NGOs), like Amnesty International
and Human Rights Watch, early emphasised the need to analyse “corporate behaviour
through human rights lens”107, correctly putting the accent on the human rights
dimension of CSR. For Transparency International, there is a “missing link” with anti-
corruption and it should include, beyond “the management of economic, social and
environmental impacts”, also the “relationships within the workplace and marketplace,
along the supply chain, in communities and among policymakers”108. But for different
reasons, none of these definitions seems completely satisfactory, as it will be explained
below. The proliferation of definitions and the constellation of lateral circumlocutions,
alongside the mixture of private and public initiatives, greatly contribute to confusion,
sometimes intently109.
Member companies included, inter alia, ABB, AREVA, Barclays, Coca-Cola, Ericsson, General Electric, Gap, HP, National Grid, Novartis Foundation for Sustainable Development. 105 Lord R. RICHARD HOLME and P. WATTS: “Corporate Social Responsibility: Making Good Business Sense, in World Business Council for Sustainable Development No. 10, available at www.wbcsd.ch. 106 Founded in Boston in 1997, GRI is one of the earliest purely private initiative, initially centred on environmental business sustainability, comprising periodic reports, and later expanded to more general ‘human rights and corruption’ objectives. It has issued up to four updates of their own guidelines. See: www.globalreporting.org. 107 HUMAN RIGHTS WATCH: Corporate Accountability: a Human Rights Watch Position Paper. Recommendations to the Special Representative to the U.N. Secretary General on Business and Human Rights, 8 September 2005. Available at: https://www.hrw.org/news/2005/09/08/corporate-accountability-human-rights-watch-position-paper. 108 TRANSPARENCY INTERNATIONAL: Corporate Responsibility and Anti-Corruption: the Missing Link?, Working Paper No. 1 (2010), p. 2. Available at: www.transparency.org. 109 Definitions of CSR usually hide an “agenda”. As noted by the philosopher Ludwig Wittgenstein, in the proposition 4.002 of his famous Tractatus Logico-philosophicus: “Language disguises the thought; so that from the external form of the clothes one cannot infer the form of the thought they clothe, because the external form of the clothes is constructed with quite another object than to let the form of the body be recognised”. L. WITTGENSTEIN: Tractatus Logico-Philosophicus (Introduction by Bertrand Russel; Translation by CK OGDEN revised by the author), New York 1999, Dover Edition, p. 45.
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Having said this, the most famous initiative so far is the UN Global Compact110: a
private led institution but with mixed public-private participants, which also includes
soft monitoring (annual reports called “Communications on Progress”). The UN Global
Compact incorporates 8,041 business participants (among which the 25% of Fortune
Global 500 Companies) and 4,449 non-business participants111, together with local
networks and the UN sponsorship. The Global Compact importantly combines
sustainability with explicit human rights criteria (principles 1 and 2 of the Compact),
revealing the UN input or influence when it was launched (it was Kofi Annan who came
up with the idea in 1999112) and the UN continuous support ever since. Despite its
private foundation and financing, the Global Compact has received the official
recognition of the UN General Assembly113 for its work and for the coordination
opportunities it creates between the public and private sectors in the area of business
and human rights114.
In this context, the G7 leaders gathered in Germany (June 2015) “strongly support[ed]
the UN Guiding Principles on Business and Human Rights and welcome[d] the efforts
110 Defined as a “voluntary initiative based on CEO commitments to implement universal sustainability principles and to take steps to support UN goals”, www.unglobalcompact.org. 111 UN GLOBAL COMPACT: Impact. Transforming Business, Changing the World (Report 2015), 205 pp., at pp. 48-49, online publication (ibid.) 112 In line with the increasing awareness on the need of private-public partnerships (see section 1 of this chapter), the Global Compact was the personal initiative of former UN Secretary-General Kofi Annan to gather UN agencies, Governments, Companies (who also keep financially alive the Compact), NGOs and CSOs around ten basic principles on business and human rights. In his own words at Davos (1999), the UNSG “propose[d] [… to] initiate a global compact of shared values and principles, which will give a human face to the global market”. It was formally constituted a year later (2000) at the UN Headquarters in New York, despite being a mixed public-private institution. See the Foundation website with a list of the companies’ financial contribution by years: www.globalcompactfoundation.org. 113 See for instance GENERAL ASSEMBLY (UN): Resolution “Towards global partnerships: a principle-based approach to enhanced cooperation between the United Nations and all Relevant Stakeholders”, 7 February 2014, UN Doc. A/RES/68/234, para. 7, 9 and 11 (specifically acknowledging the UN Global Compact and looking forward to increasing the cooperation). 114 The UN Global Compact is still one of the most representative private institutions. Any company can adhere by sending a formal letter to the UN S-G, committing to summit a communication on progress two years later and to engage in active dialogue within three months if a complaint is received. The likelihood to participate in the Compact depends on the presence and relations between the UN and the home country of the company, markets’ influence, the strength of local CSOs and NGOs (social pressure), the pressure of local and international politics plus the eventual costs of being excluded (mainly at a reputational level). See in this regard: P. BERNHAGEN and N.J. MITCHELL: “The Private Provision of Public Goods: Corporate Commitments and the United Nations Global Compact”, in International Studies Quarterly, No. 54 No. 4 (2010), pp. 1175-1187, at pp. 1178-1179. The problem of incorporating the word “UN” within its own name, despite being a mainly private-multi-stakeholder forum, has raised concerns of “blue-washing”. The UN repeatedly clarifies that the logo is different and that exclusions from the Compact and a list of “inactive companies” would avoid this risk of using the UN’s image to the benefit of non-compliant enterprises. A good state of play at: C. VOEGTLIN and N.M. PLESS: “Global Governance: CSR and the Role of the UN Global Compact”, in Journal of Business Ethics, Vol. 122 No. 2 (2014), pp. 179-191, passim.
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to set up substantive National Action Plans” and “urge[d] the private sector
implementation of human rights due diligence”115. On companies’ side, we cannot turn
a blind eye to the multiplication of private initiatives; suffice it to add two last
examples: the creation of the Dow Jones Sustainability Index (DJSI) in 1999, and the
Equator Principles, launched in 2003, to assess environmental and social risks among
financial institutions (mainly private, but also public ones). How did we get to this
expansion and status of CSR? Undoubtedly, it has emerged as a permanent item on the
international agenda, to a large extent determined by the UN commitment in the area of
‘business and human rights’.
This section will first assess the role of the UN in reviving and setting the global CSR
agenda, the UN initial leadership, to discuss afterwards the surrounding controversies.
We end up proposing a definition of CSR.
1.3.1 CSR and the United Nations: a new momentum
If we leave aside the initial OECD approach (the 1970s first version of the Guidelines
on Multinational Enterprises), the UN has played a prominent role in reviving,
consolidating and clarifying CSR.
The well-known human rights’ primacy in the UN Charter (article 1, purpose No. 3 of
the Organisation) has recently been blended with the pursuit of “higher standards of
living, full employment, and conditions of economic and social progress and
development”, in the exact wording of article 55 of the same Charter. The UN
contribution can be divided into two periods; before and after 2005/2006. There are
both institutional and substantive reasons to make such a separation that year. In 2006,
the Human Rights Council (HRC) is constituted by the General Assembly116 to replace
the former Commission on Human Rights. Furthermore, it coincides with the then
Commission’s request to appoint a Special Representative of the Secretary-General
(SRSG) on the issue of human rights and transnational corporations and other business
115 G7: Leaders’ Declaration, G7 Summit, Germany, 7-8 June 2015, p. 6. 116 GENERAL ASSEMBLY (UN): Resolution adopted on the Human Rights Council, 15 March 2006, UN Doc. A/RES/60/251, 3 April 2006.
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enterprises for “an initial period of two years”117. The then Secretary-General Kofi
Annan finally appointed John Ruggie118 (28 July 2005), a Harvard Professor that had
already served him as Assistant and Senior Adviser for strategic planning between 1997
and 2001. He had also participated in the creation of the above-mentioned UN Global
Compact and in the elaboration of the MDGs. We therefore distinguish two periods in
this section, before and after 2005/2006.
It must be said that related issues had already been addressed by different organs of the
UN since the late 1990s, very prominently by the Security Council. For example, with
regard to Irak in 2003, it affected some TNCs to ensure humanitarian relief through the
prioritisation of basic goods and the renegotiation of some contracts119. In the case of
Sierra Leone (and later, other countries), the Security Council dealt with illegal trade in
diamonds120 and, finally, even “welcomed” and “strongly support[ed]” the Kimberley
Process Certification Scheme121, by which the relevant companies and governments
adopted a mixed self- and co-regulatory scheme to avoid fuelling armed conflicts and
connected human rights’ violations. The Kimberley Process is an exceptional milestone
to the extent the Security Council explicitly considered and upheld a “voluntary system
of industry self-regulation”122.
Back in 1998, the then Sub-Commission on the Promotion and Protection of Human
Rights established a Working Group (WG) on TNCs123, whose mandate was extended
until 2004. This first WG was asked to study the activities of TNCs and the way IHRL
could address that problematic. It was clear that the previous initiatives of the 1970s, the
OECD Guidelines on MNEs and the ILO Tripartite Declaration of Principles
concerning Multinational Enterprises and Social Policy (first edited in 1977), both had
117 COMMISSION ON HUMAN RIGHTS (UN): Resolution on Human rights and transnational corporations and other business enterprises, 20 April 2005, UN Doc. E/CN.4/RES/2005/69, para 1. 118 UN Doc. SG/A/943. See press release at: http://www.un.org/press/en/2005/sga934.doc.htm 119 SECURITY COUNCIL (UN): Resolution (on Irak), 28 March 2003, UN Doc. S/RES/1472 (2003), para. 4 (-empowering the S-G to adopt the necessary measures to conduct such negotiations). 120 SECURITY COUNCIL (UN): Resolution (on Sierra Leone), 4 December 2002, UN Doc. S/RES/1446 (2002). 121 SECURITY COUNCIL (UN): Resolution “on the illicit trade in rough diamonds”, 28 January 2003, UN Doc. S/RES/1459 (2003), para. 1. 122 Ibíd., para. 2. 123 The Sub-Commission’s Resolution 1998/8 of 20 august 1998, established a mandate extended in Res. 2001/3 of 15 august 2001 for three additional years.
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obvious deficits, since they lacked of enforcement tools and had “toothless dispute
resolution procedures”124.
Against this background, the then Sub-Commission wanted to go a step further towards
a systematic approach instead of contingent, soft and case-by-case actions125. The work
of the WG materialised in the famous Draft UN Norms126, which aroused the
enthusiasm of NGOs and activists whereas Member States and TNCs remained very
critic. The areas covered were non-discrimination, the right to security of persons,
workers’ rights and the environment, while institutionalising ‘stakeholders’
participation. The phrasing recurred to many undetermined legal concepts, which
contrasted with the eventually hard implementation measures127.
Indeed, the Norms directly addressed TNCs and placed on them direct obligations, so
that it could be interpreted as a quite revolutionary “restatement of human rights
law”128, since IHRL is founded on States’ direct responsibility –at least in vigilando
when it comes to violations caused by third-parties / private actors, who might only be
bound indirectly, via domestic law. Ten years later, the feeling is still widespread that
the Norms “were ahead of their time”129. Despite the lively debate (diplomat-speak for
‘lack of consensus’), the Sub-Commission considered the draft Norms to “reflect most
of the current trends in the field of International Law, and particularly international
human rights law”, and approved them in the form of a draft resolution130. At the upper
level of the Commission, however, the text was thrown back and blocked. The
124 D. CASSEL: “Does the World Need a Treaty on Business and Human Rights? Weighing the Pros and Cons”, Conference held at the Notre Dame University London Centre, May 14 (2014) –not published. We take this opportunity to thank Professor Cassel for his academic advice and friendly help since our first meeting within the framework of the LL.M on IHRL in the University of Alcalá (Madrid). 125 The Sub-Commission issued various reports in which it summarised its progressive interpretation of IHRL and the results of diverse consultation processes (see UN Doc. E/CN.4/2005/91 of 15 February 2005), and also on specific issues such as extractive industries (see UN Doc. E/CN.4/2006/92 of 19 December 2005), including the identification –treaty by treaty- of private duties in IHRL and its stand for clear extraterritorial measures. 126 UN Doc. RES E/CN.4/SUB.2/2003/12/REV.1 127 SUB-COMMISSION ON HUMAN RIGHTS (UN): Norms on the Responsibilities of Transnational Corporations and Other Business Enterprises with Regard to Human Rights, UN Doc. E/CN.4/Sub.2/2003/12/Rev.2, para. (draft articles) 15 to 19 (on implementation). 128 J.H. KNOX: “The Ruggie Rules: Applying Human Rights Law to Corporations”, in R. MARES (Ed.): The UN Guiding Principles on Business and Human Rights. Foundations and Implementation, Leiden-Boston 2012, Martinus Nijhoff Publ., pp. 51-83, at p. 53 (and ff.). 129 B. HORRIGAN: Corporate Social Responsibility in the 21st Century. Debates, Models and Practices Across Government, Law and Business, United Kingdom 2010, Edward Elgar Pub. Ltd., p. 318. 130 SUB-COMMISSION ON HUMAN RIGHTS (UN): Draft Resolution on Responsibilities of Transnational corporations and other business enterprises with regard to human rights, 7 August 2003, UN Doc. E/CN.4/Sub.2/2003/L.8, p. 2 (citation).
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Commission on Human Rights strongly rejected the Norms and felt compelled to clarify
that the draft had “not been requested by the Commission” and had “no legal
standing”131. In fact, John Ruggie’s first interim report in 2006 stated that the draft
Norms were “engulfed by its own doctrinal excesses” and included “exaggerated legal
claims and conceptual ambiguities”132, in a “deliberately undiplomatic language”133 as
Ruggie himself recognised in a book of reflections after his mandate. Later on, the very
first sentence of one of the most important reports submitted in 2008 by John Ruggie
more softly rebuked the former Sub-Commission insisting on the fact that the
“international community is still in the early stages of adapting the human rights regime
to provide more effective protection […] against corporate-related human rights
harm”134.
As mentioned earlier, a new momentum for CSR arrived with the appointment of John
Ruggie and his significant contribution between 2005 and 2011135, when his mandate
expired. The appointment of Prof. Ruggie might be related to the agitation in the after-
match of the Draft UN Norms, which ignited dormant controversies. We may argue the
draft Norms were even counter-productive as a maximalist wish list that rearmed CSR
detractors. Ruggie’s appointment somehow responded to the need to unblock the
situation136 and reinstall a consensus-oriented negotiation. Within the UN human rights
system, the mandate as SRSG on the issue of human rights and transnational
corporations and other business enterprises corresponds to the Special Procedures
Branch (SPB) of the HRC, being in this case a thematic mandate137. In comparison to
131 COMMISSION ON HUMAN RIGHTS (UN): Resolution 2004/116 on the Responsibilities of transnational corporations and related business enterprises with regard to human rights, 20 April 2004, UN Doc E/CN.4/2004/L.11/Add.7 p. 81 ff. 132 COMMISSION ON HUMAN RIGHTS (UN): Interim Report of the SRSG on the issue of human rights and transnational corporations and other business enterprises, 22 February 2006, UN Doc. E.CN.4/2006/97, at para. 59. 133 J.G. RUGGIE: Just Business. Multinational Corporations and Human Rights, New York 2013, WW Norton & Comp. p. 54. 134 HUMAN RIGHTS COUNCIL (UN): “Protect, Respect and Remedy: a Framework for Business and Human Rights”, Report of the SRSG on the issue of human rights and transnational corporations and other business enterprises John Ruggie, 7 April 2008, UN Doc. A/HRC/8/5, para. 1 (emphasis added). 135 His mandate was further extended in 2008 for an additional period of three years. HUMAN RIGHTS COUNCIL (UN): Resolution on the mandate of the SRSG on the issue of human rights and transnational corporations and other business enterprises, 18 June 2008, UN Doc A/HRC/8/7, para. 4. 136 B. HORRIGAN: op. cit., p. 320. 137 It is assumed the reader is familiar with the United Nations system in relation to human rights protection. For a detailed study on the Special Procedures, we recommend the diverse publications of Prof. Elvira Dominguez (Middlesex-University, London), whom we sincerely thank for her longstanding friendship and willingness to help: E. DOMINGUEZ: “Public Special Procedures under Damocles Sword”, in Human Rights Law Journal, Vol. 29 No. 1 (2008), pp. 32-40, and E. DOMINGUEZ: “Rethinking the Legal Foundations of Control in International Human Rights Law: the Case of Special
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Treaty Bodies and other UN mechanisms, the SPB constitute a more flexible and
political tool, less legally straitjacketed and thus more adapted to the multifaceted
challenges of CSR.
The main outcome of Ruggie’s first mandate is the three-level framework “Protect,
respect and remedy”138, by which States have the primary and more active duty to
ensure human rights’ protection, to comply with their international obligations and
make them permeate into their internal legal orders. In this sense, States’ duty shall be
understood as a holistic commitment to re-examine existing and future legislation,
international agreements and policy actions from a human rights perspective. It further
encourages specific legislative and political initiatives to improve human rights respect
among companies. Unlike the Draft UN Norms, Ruggie’s framework consequently
restores the “bedrock role of States”139. Secondly, companies are expected to respect
human rights, a “baseline responsibility”140, linked to the compliance of existing
legislation and, if possible, moving beyond and adhering to international standards and
codes of conduct. In our view, the emphasis lies on prevention, “independently of
States’ duties”141 so that the enterprises operating in conflictive areas (because of armed
conflicts or fragile and failed States) would show the same commitment regardless of
weak governments or weak enforcement mechanisms. Finally, both States and
Companies must cooperate to provide access to remedies (third level of the framework),
without excluding –or even fostering– non-judicial and non-state-based grievance
mechanisms –provided these comply with certain minimum criteria; in any case, we are
rather unconvinced of the effectiveness of such mechanisms if state-based and purely
judicial ones are not strengthened, available and reliable142.
The complementarity of the three levels would help reduce the governance gaps
generated by globalisation in the protection of human rights. Ruggie’s framework
Procedures”, in Netherlands Quarterly of Human Rights, Vol. 29 No. 3 (2011), pp. 261 ff. For a comprehensive overview on the protection of human rights in the United Nations see: C. VILLÁN DURÁN and C. FALEH PÉREZ: Manual de Derecho Internacional de los Derechos Humanos, Madrid 2012, Universidad de Alcalá. 138 UN Doc A/HRC/8/5. 139 Ibíd., para. 50. 140 Ibíd., para. 54. 141 Ibíd., para 55. 142 Ruggie identifies six criteria that would make non-judicial and non-state based grievance mechanisms acceptable: they ought to be “legitimate, accessible, predictable, equitable, rights-compatible and transparent”. Ibíd., para. 92.
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summarised extensive consultations made between 2005 and 2008143 and complemented
his preliminary report. The SRSG produced an utterly useful state of the art, especially
interesting in relation to access to justice and the current possibilities to facilitate
effective remedies for corporate-related human rights victims, but shows some
weaknesses. In terms of access to justice, we have already noted that it wide opened the
door to non-judicial and non-state grievance tools, someway oddly put on equal foot
with traditional access to courts. It would have been more adequate to further develop
the current –though scarce– possibilities for human rights victims to fil suits144. As for
the second level on corporate respect, it seems to be built upon a profusion of
undetermined legal concepts (“due diligence”145, “complicity” and “spheres of
influence”). These notions do not provide a sufficiently solid ground to assign a
responsibility in practice. John Ruggie tried to explain these concepts in separate
reports146, in the form of goodist exercises lege ferenda without much success.
At this stage, Ruggie’s success was fairly political and lied on his capacity to set
himself up as an authoritative voice in this subject, acceptable for all relevant actors and
subjects, in order to take away the bitter taste of the precedent UN attempt (the draft
Norms) and renew the Organization’s efforts towards a “more systemic response with
cumulative effects”147. As cited above, the HRC “welcomed” this three-level framework
in Resolution 8/7 and extended until 2011 the SRSG’s mandate.
The United Nations Guiding Principles (UNGPs) were the final result of Ruggie’s
mandate. Above and beyond criticisms and debates, it is important to support the
change of mind-set confirmed with the UNGPs and already present in the three-level
framework: the definitive priority was to detect practical “implications of existing
standards”148 in lieu of creating new instruments or new obligations under IHRL. We
143 HUMAN RIGHTS COUNCIL (UN): Report of the SRSG on the issue of human rights and transnational corporations and other business enterprises, Addendum on Corporate responsibility under international law and issues in extraterritorial regulation: summary of legal workshops, 15 February 2007, UN Doc. A/HRC/4/35/Add.2. 144 Given its complexity, this problematic is further studied in a separate section (Chapter IV, Section 2). 145 On this concept we recommend referring to the PhD thesis of Prof. Lozano Contreras: F. LOZANO CONTRERAS: La noción de diligencia debida en derecho internacional público, Barcelona 2007, Atelier Ed., 340 pp. 146 HUMAN RIGHTS COUNCIL (UN) : Clarfying the Concepts of Sphere of Influence and Complicity, Report of the SRSG on the issue of human rights and transnational corporations and other business enterprises John Ruggie, 15 May 2008, UN Doc. A/HRC/8/16. 147 UN Doc. A/HRC/8/5, op. cit., para. 106. 148 “The Guiding Principles’ normative contribution lies not in the creation of new international law obligations but in elaborating the implications of existing standards and practices for States and
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fully support this aspect of Ruggie’s approach in the present research: there are
possibilities, already in place, to improve the dialectic between business and human
rights (this idea is partly explored in the following chapter, when we track some of
those current possibilities). It is also important to point out that, while recognising that
CSR “morphed out of corporate philanthropy”149, Ruggie finally suggests that they are
separate concepts by now: “Business enterprises may undertake other commitments or
activities […] [b] ut this does not offset a failure to respect human rights throughout
their operations [emphasis added]”150, introducing this way some kind of necessary
connection with the impacts caused by the concrete activity of the enterprise at stake.
This will be very important in the definition we propose later.
At the same time, John Ruggie was also right to stress the vital role of States, which
need to be more proactive in translating their international obligations into their
domestic legal systems. Otherwise, without an active engagement at the State level, the
UNGPs are not likely to have a positive impact in practice151, despite being in
themselves a significant and substantive twist of IHRL in its interaction with global
business. At the State level, Ruggie builds on the crucial difference between legislative
initiatives and ‘policies’152, and the importance of ensuring the human rights
compatibility of any existing/future and legal/policy action throughout all governmental
departments153, including apparently unrelated fields such as company law, investment
agreements and trade policies within international institutions154.
Besides these essential aspects of the UNGPs, on which we absolutely agree with the
SRSG, we shall recall that their basic goal was to ‘operationalise’ the three-level
framework. There are, of course, some procedural good ideas, such as the general
emphasis on prevention, the so-called ‘human rights impact assessments’, the
importance of broad consultations alongside stakeholders, human rights experts and
businesses”, HUMAN RIGHTS COUNCIL (UN): Report of the SRS on the issue of human rights and transnational corporations and other business enterprises John Ruggie, “Guiding Principles on Business and Human Rights: Implementing the United Nations ‘Protect, Respect and Remedy’ Framework”, 21 March 2011, UN Doc. A/HRC/17/31, para. 14. Hereinafter, we will refer to the Guiding Principles with the corresponding number (Guiding Principle 1, 2, etc.), as annexed to this report. 149 J.G. RUGGIE: Just Business…, op. cit., p. 68. 150 Guiding Principle 11 (commentary). 151 S.A. AARONSON and I. HIGHAM: “Re-righting Business: John Ruggie and the Struggle to Develop International Human Rights Standards for Transnational Firms”, in Human Rights Quarterly, Vol. 35 No. 2 (2013), pp. 333-364, at p. 337. 152 Guiding Principle 3. 153 Guiding Principles 8 and 9. 154 Guiding Principle 11.
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‘auditors’, the usefulness of follow-up resorts, and internal capacity-building
initiatives155.
However, in the overall, the UNGPs don’t succeed in “clearly articulating this crucial
distinction between decisions [policies] and processes of companies”156. In this
connection, they constitute a failed opportunity to really clarify corporate “due
diligence” and related concepts, as said before. Due diligence is a double-edged sword
and can also benefit non-compliant companies to be easily discharged or absolved “if it
can demonstrate and document a certain standard of precaution taken”157, no matter how
limited it may be. The risk is there that companies end up “perceiving human rights as
risks and due diligence as a ‘defence’ to ward off suits”158, and not as a minimum
“precondition” for any business. We can give yet another turn of the screw to this
problem, revealing the absolute “need of clarification”: on one hand, we have noted that
due diligence can limit the risk of complicity liability but, on the other hand, it will not
fully exempt companies from incurring in such liability so that, in some cases,
companies may be tempted to avoid any policy of due diligence if this means to
“acquire knowledge which could be held against it in the context of a complicity
charge”159.
In more general terms, continuing with the second level of Ruggie’s framework and
guidelines, it can be asked if “can implies ought”. Ruggie’s book of reflections,
published in 2013, contains a contradiction: it first states that “can implies ought”, but
only partially because companies’ influence must be strong enough to imply some kind
of duty: “it is one thing to ask companies to support human rights voluntarily where
they have influence, as the Global Compact does; but attributing legal obligations to
them on that basis for meeting the full range of human rights duties is quite another”160.
155 Guiding Principles 18 to 21. 156 S. DEVA: Regulating Corporate Human Rights Violations. Humanising Business, London-New York 2012, Routledge Ed., p. 208. 157 B. FASTERLING and G. DEMUIJNCK: “Human Rights in the Void? Due Diligence in the UN Guiding Principles on Business and Human Rights”, in Journal of Business Ethics, Vol. 116 No. 4 (2013), pp. 799-814, at p. 807. 158 As stated by Surya Deva, “they have a responsibility to respect human rights as a precondition to doing business and irrespective of whether human rights pose risks or opportunities for them”. S. DEVA: “Guiding Principles on Business and Human Rights: Implications for Companies”, in European Company Law, Vol. 9 No. 2, April 2012, pp. 101-109, at p. 107. 159 S. MICHALOWSKI: “Due Diligence and Complicity: a relationship in need of clarification”, in S. DEVA and D. BILCHITZ (Eds.): Human Rights Obligations of Business. Beyond the Corporate Responsibility to Respect?, Cambridge 2013, Cambridge University Press, pp. 218-242, at p. 240. 160 J.G. RUGGIE: Just Business…, op. cit., p. 50.
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Interestingly, later in his book, he explains that “a social norm expresses a collective
sense of ‘oughtness’ with regard to the expected conduct”161 of companies. This is
probably an inadequate and confusing normative foundation to operationalise the
second level of the UN guidelines, essentially for the reason that social expectations are
the less important –eventual– source of normativity (if they might even have that
status), the forgotten source is simply IHRL and its permeation into the internal legal
order, by which it should affect the behaviour of non-State actors162.
Also related to the second level (on companies’ respect), “spheres of influence” –
connected to due diligence– are an even fuzzier notion, a “metaphor” by which the
SRSG refers to suppliers and ‘related companies’ (subsidiaries, branches, etc.), up to
almost any stakeholder. It would have been interesting to have a closer look at company
law and taxation law. Within complex transnational corporate groups, international
company law and taxation law can provide inspiration on how to determine more
accurately the actual corporate relationships (hence responsibilities), starting with the
assessment of ‘corporate veils’ and ‘frauds’, and related issues that might legitimately
be extrapolated to human rights cases163, provided some obvious differences.
Many other problems already signalled before remain equally unsolved. In an interview
after the end of his mandate, the former SRSG tried to hide behind the then on-going
Kiobel judgement (US Supreme Court) to keep on justifying his approach concerning
access to justice. Kiobel was surely problematic for human rights activists and lawyers,
but it is also probably exaggerated to conclude, as John Ruggie quickly did, that “we are
not even sure anymore whether it is possible to hold companies [… accountable for]
crimes against humanity under the US Alien Tort Statute”164. It can perfectly be argued
161 Ibíd., pp. 91-92. 162 Bilchitz also note that many acts are perfectly legal and legitimate even if, sometimes, they may contradict ‘social norms’ (let’s think of gender or racial discrimination). D. BILCHITZ: “A Chasm between ‘is’ and ‘ought’? A critique of the normative foundations of the SRSG’s Framework and the Guiding Principles”, in S. DEVA and D. BILCHITZ: op. cit., pp. 107-137, passim. 163 In general terms, the debate is about the value we give to merely formal distinctions in comparison to actual behaviours and control within corporate groups. It can be argued that, in taxation law, the debate is expressed in terms of intentio iuris vs. intentio facti; the latter is the one that counts when it comes to assess the alleged illegality of tax evasion through any artificial montage. We further refer to taxation law below, at pp. 234-236. For instance, see: T. ROSEMBUJ: Minimización del impuesto y responsabilidad social corporativa, Barcelona 2009, Ed. El Fisco, pp. 365-366. We thank Dr. Enrique Sánchez de Castro Martín-Luengo for this reference. 164 INTERNATIONAL REVIEW OF THE RED CROSS: “Interview with John G. Ruggie”, in International Review of the Red Cross, Vol. 94 No. 887 (Autumn 2012), pp. 891-902, at pp. 898-899.
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that the Supreme Court left the “door open”165. Notwithstanding the in-depth
development of this issue later in this research, we have for instance the impression that
the SRSG somehow disregarded or underestimated some current and actual possibilities
to access courts, albeit imperfect and limited ones.
Further questions include, for example, the problem of companies “owned or controlled
by the State, or that receive substantial support and services from State agencies”166,
which would have an additional burden with regard to human rights. The phrasing
allows important loopholes: would it be enough a minority shareholding by the State to
create additional CSR duties in the company? The mere participation by the State is
enough or does it mean that, under the UNGPs, States are compelled to foster a
company’s CSR only if they have more than 50% of shares? What is meant by “control”
and “substantive support”?
We shall finish wondering whether a voluntary code of conduct might have any
contractual value once adopted by a TNC, given that it should be “approved at most
senior level”, affect all operations and be public and available. There are other pending
questions, minor ambiguities and imprecisions, which perhaps explain why the UNGPs
reached an unprecedented consensus in this subject. Surya Deva speaks of “consensus
rhetoric” only because of the obsession to get the guidelines adopted without a vote, by
consensus in the HRC: this author considers that John Ruggie “lightly” played with
human rights terminology (“violation becomes impact” 167) and that the UNGPs generate
confusion on eventual corporate obligations under International Law168. This is perhaps
too harsh despite the legitimate criticism on the shortfalls of the UNGPs. Is it necessary
to recall that human rights language was simply and completely absent in the corporate
world not so long ago? In fact, we feel more comfortable expressing that, though clearly
improvable, the UN initiatives made an important contribution reviving, consolidating
and exploring (if not, limitedly clarifying) CSR. As Surya Deva himself says, “existing
165 D. CASSEL: “Suing Americans for Human Rights Tort Overseas: the Supreme Court Leaves the Door Open”, in Notre Dame Law Review, Vol. 89 No. 4 (2014), pp. 1773-1812. 166 Guiding Principle 4. 167 S. DEVA: “Treating Human Rights Lightly: a critique of the consensus rhetoric and the language employed by the Guiding Principles”, in S. DEVA and D. BILCHITZ (Eds.): op. cit., pp. 78-106, at p. 96. 168 Interestingly, during Kiobel judgement, Royal Dutch Petroleum used the 2007 report of John Ruggie to allege that, under international law, there cannot be ‘direct’ obligations for corporations; whereas it is generally known that international criminal law specifies direct obligations at least against gross violations, as Ruggie himself fell compelled to clarify in an amicus brief before the US Supreme Court.
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(primarily) state-focal international institutions should be utilized for what they could
possibly deliver”169, even more so since it is an on-going process.
On balance, we consider it important to underline the positive factors of the three-level
framework and the UNGPs, above any logical criticism. The UNGPs may inspire more
questions than answers, but they provide a few fundamental answers, which have
characterised CSR thereafter: 1) the human rights based approach to CSR; 2) the
general emphasis on prevention; 3) the crucial role of States and international
institutions (they cannot elude responsibility just because it is ‘corporate-related’’); 4)
the holistic vocation (comprising any legal and policy aspects or field), and 5) the non-
negligible effort to put some order in the debate. From there on, it is impossible to
convince everyone on every aspect. As Prof. Ruggie recognised, the expiration of his
mandate was only “the end of the beginning”170.
After the UNGPs, most disapproval came from NGOs171: they considered that it
confirmed the current statu quo and the definitive abandonment of the project of a
binding instrument, since it is said that the WG that succeeded the SRSG after 2011172
does not have enough powers to go any step further173. Indeed, apart from focusing on
national action plans174 alongside its new capacity to conduct country visits175 and
169 S. DEVA: Regulating…, op. cit., p. 218. 170 J.G. RUGGIE: Just Business…, op. cit., p. 126. Also see: J.M. AMERSON: “The end of the Beginning? A comprehensive look at the UN’s Business and Human Rights Agenda from a Bystander Pespective”, in Fordham Journal of Corporate and Financial Law, Vol.17 No. 4 (2012), pp. 871-941. 171 However, this is no obstacle to widely using the UNGPs when it comes to allege violations by TNCs, and therefore showing some success of Ruggie’s work, even among NGOs. 172 The HRC established in 2011 a WG consisting of five independent experts from diverse regional backgrounds to follow-up on the UNGPs, their dissemination, implementation, further recommendations and capacity-building initiatives. As said above, the possibility of country visits is a novelty. See: HUMAN RIGHTS COUNCIL (UN): Resolution on Human Rights and transnational corporations and other business enterprises, 6 July 2011, UN Doc. A/HRC/RES/17/4, para. 6 and 7 (establishment of the WG and competencies). The WG’s mandate was extended for an additional period of three years by the HRC in July 2014: HUMAN RIGHTS COUNCIL (UN): Resolution on human rights and transnational corporations and other business enterprises, 15 July 2014, UN Doc. A/HRC/RES/26/22, para. 10. 173 R.C. BLITT: “Beyond Ruggie’s Guiding Principles on Business and Human Rights: Charting an Embracive Approach to Corporate Human Rights Compliance”, in Texas International Law Journal, Vol. 48 No. 1 (February 2012), pp. 33-62, at p. 53. 174 National implementation is one of the new priorities, compared to Ruggie’s phase, of the WG, as stated in the WG’s report to the General Assembly: GENERAL ASSEMBLY (UN): Report of the Working Group on the issue of human rights and transnational corporations and other business enterprises, 5 August 2014, UN Doc. A/69/263. 175 The WG has visited Mongolia (A/HRC/23/32/Add.1), Ghana (A/HRC/26/25/Add.5), the Republic of Azerbaijan (A/HRC/29/28/Add.1) and the USA. For example, the WG visited the USA in June 2014 (Report UN Doc. A/HRC/26/25/Add.4) and in October the same year President Obama announced that a national action plan on business and human rights would be elaborated. We take this opportunity to warmly thank Mme. Carmen Rosa Rueda, Human Rights Officer in the UN-OHCHR for her friendship
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convoke the annual forum in Geneva headquarters, it seems that there isn’t much
advancement in this field or, at least, not anymore at the same speed as between 2005
and 2011.
In the meanwhile, the Government of Ecuador and its Permanent Representation in
Geneva were particularly active in promoting binding formulas, ideally a proper treaty
on business and human rights. This brings us back to the debate between mandatory or
voluntary schemes, discussed in the following section. We note for instance that, by
virtue of Resolution 26/9 of the HRC, an open-ended intergovernmental working group
was established to work on an eventual treaty176. This intergovernmental initiative
overlaps with the independent experts of the other WG on the same issue, which might
generate tensions au-fur-et-à-mesure they start submitting parallel reports to the HRC
and the General Assembly. For the moment, the first session of the intergovernmental
working group was held in July 2015 and its potential effects are still unforeseeable. In
sum, during the first decade of the 21st Century, the UN has certainly played a central
role in reviving, consolidating and clarifying CSR, even though its leadership seems to
have recently decayed.
1.3.2 The controversial definition of CSR
Before we conclude with a definition of CSR, it is necessary to assess a few
surrounding controversies, some of which have already been mentioned, reactivated by
the UN framework and guidelines. We take as a starting point the invitation to abandon
“unduly dichotomous ways of thinking”177, together with the obvious need to resituate
CSR in the broader context of human rights. For us, the fact that this field primarily
addresses “corporate activity” and not only States, is not enough to say that CSR and
human rights are absolutely “distinct concepts”178: almost any ‘specialised’ human
and help during our internship in 2013, and for keeping us updated with press releases and news on the different sessions of the HRC. 176 HUMAN RIGHTS COUNCIL (UN): Resolution on the elaboration of an international legally binding instrument on transnational corporations and other business enterprises with respect to human rights, 14 July 2014, UN Doc. A/HRC/RES/26/9, para. 1. 177 C. SCOTT: “Translating torture into transnational tort: conceptual divides and the debate on corporate accountability for human rights harms” in C. SCOTT (Ed.): Torture as Tort, Oxford 2001, Hart Publ., pp. 45-64, at p. 45. 178 Of course, CSR and human rights, taken separately and isolate, are different concepts, but the first should be resituated within the broader context of the latter, being therefore not so different in this regard,
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rights treaty179 addresses indirectly (but quite substantively) third party activities (other
than States) and relationships between private parties, regardless of a monist or a dualist
implementation. Similarly to our approach on general human rights issues, we consider
that too clear-cut distinctions between different human rights contribute to an
undesirable legal fragmentation undermining the universality, indivisibility and
interdependency of all human rights. We therefore consider CSR an additional aspect
under the human rights umbrella. It becomes clear from this research that the separation
between CSR and the debate on “business and human rights” is precisely a biased
viewpoint180: they are not separate things and we fully support an integrated approach.
And last but not least, the oppositions between –mainly– mandatory or voluntary
initiatives, and subjects vs. objects of IL, are not insuperable.
But the very first debate is neither a legal nor an economic issue: it is political. Liberal
schools of thought are generally contrary to CSR or any related concept. Its most
relevant spokesman was Milton Friedman and his famous New York Times’ article
back in 1970. His hard-hitting remarks defined CSR as a “suicidal impulse” of some
businessmen, an improper and informal (thus unlawful) social tax. Liberal detractors
have more modern expressions181; in essence, they put forward black and white
arguments, according to which shareholders’ interests, owner’s value and profit
maximisation are the only legitimate goals of a company. Any problem would have its
origin in the fact that we are not in a perfectly free market economy.
At the source of this reasoning there are a few misunderstandings182: first of all, CSR
would have no sense in a socialist system; it has precisely consolidated in a post-cold-
war and capitalist context, giving less credibility to excessive fears in this regard.
which is a nuance forgotten by Jennifer Zerk when she seems to draw a clear-cut distinction between them. Cfr. J. ZERK: op. cit., pp. 43-44. 179 By “specialised human rights treaty” we exclude the ICCPR and the ICESCR, and we refer to all the treaties coming afterwards to tackle particular problems: racial discrimination, rights of the child, persons with disabilities, women, etc. 180 The “rather peculiar disconnect” and separation between CSR and human rights would constitute an unfocused approach to this subject, as it is apparent from previous section and will be further clarified in this section. It responds perhaps to the intention to avoid human rights based approach to corporate-related problems. For instance, refer to F. WETTSTEIN: “CSR and the Debate on Business and Human Rights: Bridging the Great Divide”, in Business Ethics Quarterly, Vol. 22 No. 4, October 2012, pp. 739-770. 181 Of course, Friedman’s discourse has to be contextualised within the framework of the Cold War. For an update of his position, see generally: E. STERNBERG: Just Business. Business Ethics in Action, Oxford 2000, Oxford University Press. 182 A detailed critique and point by point discussion of Friedman’s arguments can be found at: S. DEVA: Regulating Corporate…, op. cit., pp. 120-139.
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Moreover, it would not exist if companies always behaved perfectly and ethically and,
in some way, it benefits the market as a whole against the rapid exhaustion of resources
and in favour of the sustainability of capitalism itself –thinking of the problem in
entirely selfish terms. On another hand, the definite opposition between shareholders
and stakeholders is also quite mystifying: unless they have a bipolar syndrome or a
multiple personality disorder, the most probable scenario is where shareholders are also
stakeholders: shareholders can be persons of different religions, with disabilities,
women, members of a variety of NGOs and CSOs, etc. Besides, this “stockholders first”
discourse struggles with the multiplication of corporate scandals, frauds and the
increasingly problematic separation between owners and managers in modern TNCs.
Nor is there any absolute separation between private and public spheres nowadays183: as
it has been argued in the first section of this chapter, even International Organizations
(members-driven institutions par excellence) have accepted the necessary cooperation
between public and private actors to accomplish common objectives in relation to
human rights and development.
Finally, Friedman claims that CSR is seriously undemocratic and has to be seen as an
illegitimate and illegal shortcut to face social problems: “to attain by undemocratic
procedures what they cannot attain by democratic procedures” because “problems are
too urgent to wait on the slow course of political processes, [so] that the exercise of
social responsibility by businessmen is a quicker and surer way to solve pressing current
problems”184. This view is deeply American and finds its roots in the revolutionary
slogan ‘no taxation without representation’, which links the foundation of democracy to
taxes and the decisions on their allocation. This political argument is one of the trickiest
and most thought-provoking ones, because it alleges to be based on democratic values
that almost anyone would support.
Companies would act as unelected decision makers with regard to the allocation of
resources for social purposes. Does it mean that Friedman and his school of thought
would support a significant increase of proper taxes? We do not think so. Then, in our
view, CSR seems to be something different from mere charity: it starts to be clear that it
must have a connection with the actual activities and operations of the company. The
183 It seems naïve to deny that TNCs are, de facto, both economic and political actors. 184 M. FRIEDMAN: “The Social Responsibility of Business is to Increase Its Profits”, in The New York Times Magazine, September 13, 1970.
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word “responsibility” is, primarily, a concrete exercise related to those activities and
their impact; it is not an arbitrary social investment, unrelated to the activities of the
company (only in that case it could be said that the company is undemocratically
deciding on the prioritisation of some social purposes at the expense of other goals).
If we go one step further, philosophically speaking, we face the dialectic between
liberty and responsibility. Liberals treat these concepts, of Hayekian roots, radically and
purely. A radical, individualistic and pure understanding of “freedom” and
“responsibility” would allow wrongdoers and disregard prevention (conflicting with
liberty), with the only purpose to reinforce the ideal of “responsibility” (read:
punishment): “the freedom of action that is the condition of moral merit includes the
freedom to act wrongly: we praise or blame only when a person has the opportunity to
choose […] ”185. This does not seem acceptable to us: eventual victims would prefer a
less strong ideal of freedom and responsibility if their harm is more likely to be avoided
or prevented. In other words, this reasoning ignores the real-life tolls we have to pay
when a moral concept becomes a legal articulation, though being a difficult equilibrium.
Friedman’s only concession to regulation was his recognition of “the rules of the
game”: time goes by and these rules have changed186. Interestingly enough, leaving
aside liberal schools of thought, black and white arguments can be found against CSR
by authors who would only trust strict State regulation187, according to whom CSR
would mean to leave the vessel adrift, by divinising self-regulation. As it will be argued
throughout this research, CSR cannot be reduced to self-regulation, which is only a
restricted aspect of it.
An attempt to overcome the political controversy is the so-called “business case”
theory, which insists on the profitability of CSR for enterprises, economically speaking.
This strategy tries to convince managers and owners of adopting a CSR policy because
it is said to have a positive impact on benefits. Initially, it was a good point since it
185 F.A. HAYEK: The Constitution of Liberty, Chicago 1978, University of Chicago Press, p. 79. From Hayek thinking, we only retain, in part, the diagnostic: responsibility should ideally be a concrete and feasible aspect, somehow connected to the particular business at stake. Excessively large aspirations might distract from the real possible actions (ibid., pp. 83-84). 186 J. NOLAN: “Refining the Rules of the Game. The Corporate Responsibility to Respect Human Rights”, in Utrecht Journal of International and European Law, Vol. 30 No. 78 (2014), pp. 7-23. 187 Bakan eloquently alleges that: “No one would seriously suggest that individuals should regulate themselves, that laws against murder, assault, and theft are unnecessary because people are socially responsible. Yet oddly, we are asked to believe that corporate persons should be left free to govern themselves”. J. BAKAN: The Corporation, London 2004, Constable Ed., pp. 109-110.
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began to question previous assumptions and prejudices in this respect, such as the
“symbiotic relationship between repressive governance and foreign capital”188. It is
evident that companies do not necessarily and always feel at home in authoritarian or
repressive States, but “rhetoric ha[d] exceeded empirical research”189. Many authors
enthusiastically started to conduct quantitative research and generate mathematical
models to investigate eventual CSR returns on benefits190. In the banking sector, CSR is
widely seen as a “strategic value for its ability to optimize the bank quality loan
portfolio through pricing policies”191, the origin of “ethic ratings” –increasingly applied
by Ernst & Young or Standard & Poors and many other rating agencies and consultancy
firms in their daily advisory tasks and business. For better or worse, business finds its
way through.
Among other results, theories of “shared value”192 emerged to point out that CSR could
create value for both companies and stakeholders, being measurable in terms of ‘social
performance’. This leads to a merely instrumentalist or utilitarian perspective under
which it can contribute to reduce ‘business risks’ and, even, increase benefits by
creating value for both the enterprise and society. From that point of view, CSR and
human rights respect become a simple management issue of “goodwill-nomics”193:
violations would be read as risks but, sometimes, this approach can treat violations as
unavoidable costs of production, while the word ‘stakeholders’ would hide victims. This
cost-effective way of thinking has an additional problem as far as it would “allow
corporations to prioritise some human rights”194 (those more costly). All these
quantitative manias may reflect a certain “dissemination of the corporate form of
188 S.L. BLANTON and R.G. BLANTON: “What attracts foreign investors? An Examination of Human Rights and Foreign Direct Investment”, in The Journal of Politics, Vol. 69 No. 1 (February 2007), pp. 143-155, at p. 145. 189 Concerning, foreign investment, Blanton’s research would show that mathematical models refute the “dominant traditional perspective [assuming] FDI and human rights to be inherently incongruous”. Ibíd., p. 152. 190 M.F. IZZO: “Bringing theory to practice: how to extract value from corporate social responsibility”, in Journal of Global Responsibility, Vol. 5 No. 1 (2014), pp. 22-44. 191 G. BIRINDELLI, P. FERRETTI, M. INTONTI and A. IANNUZZI: “On the drivers of Corporate Social Responsibility in banks: evidence for an ethical rating model”, in Journal of Management and Governance, Vol. 19 No. 2, pp. 303-340, at p. 307. 192 M. E. PORTER and M.R. KRAMER: “Creating Shared Value: How to Reinvent Capitalism –and Unleash a Wave of Innovation and Growth”, in Harvard Business Review, Special Issue January-February 2011, pp. 63-70. 193 S. DEVA: Regulating Corporate…, op. cit., p. 139 (and ff.) 194 R. McCORQUODALE: “Pluralism, Global Law and Human Rights: Strengthening Corporate Accountability for Human Rights Violations” in Global Constitutionalism, Vol. 2 No. 2 (2013), pp. 287-315, at p. 307.
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thinking”195. CSR is only partially quantifiable, in part not to end up pricing human
rights, in so far it erroneously “mimics the logic of market transactions”196. CSR will
not always be fully profitable, nor fully damaging in economic terms. We therefore
don’t think the ‘business case’ to be the solution to the political debate; nor is it useful
to clarify the concept of CSR, its contents and essential characteristics.
In any case, as a matter of fact, the expansion of CSR seems to generate an increasingly
wide social applause and political agreement, which looks largely irreversible. CSR has
consolidated its position in the international agenda and overcome these ideological
disputes, while some legal questions arise.
Objects and subjects in International Law
Once the UN revived CSR, a parallel debate opposing subjects and objects in IL has
emerged, or perhaps re-emerged, causing rivers of ink. Is it possible for individuals and
corporations to have any kind of international legal personality? In this subject,
individuals and corporations constitute the two sides of the same coin. This is not a
neutral academic debate: its hidden purpose is to determine whether TNCs are bearers
of rights and duties under IL and to what extent.
It must be said, for instance, that IHRL would be seriously undermined if it is said to
affect exclusively the activities directly carried out by States, since they would be the
only subjects of IL. Dualist or monist, an international treaty implies the permeation of
its provisions into the internal order of the Contracting Parties and, in this sense, it
indirectly impacts third parties and private actors’ rights and duties. The dichotomy
objects vs. subjects would block the advancement of CSR, but is relatively out of date
and overtaken by reality.
195 S.E. MERRY: “Measuring the World: Indicators, Human Rights and Global Governance: with CA Comment by John M. Conley”, in Current Anthropology, Vol. 52 No. S-3 (Supplement to April 2011: Corporate Lives: New Perspectives on the Social Life of the Corporate Form, edited by D.J. PARTRIDGE, M. WELKER and R. HARDIN), pp. S-83-S-95, at p. S-83. 196 “If the corporate business case for human rights is thought to rest on maximising shareholder ‘value’ (read: profit), the monetary compensation of ‘stakeholders’ (read: victims) appears an appropriate remedy”. D. AUGENSTEIN: “The Crisis of International Human Rights Law in the Global Market Economy”, in M.K. BULTERMAN and W.J.M van GENUGTEN (Eds.): Netherlands Yearbook of International Law, No. 44 (2013), Netherlands 2014, Asser Press, pp. 41-64, at p. 53.
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More specifically, individuals have become partial legal subjects of contemporary IL,
most decisively thanks to the development of IHRL197. This is particularly evident in
some regional sub-systems where individuals can fil suits in international human rights
courts after exhausting domestic remedies. As a matter of fact, this is not only the case
with IHRL; consular law also “creates individual rights which […] may be invoked in
this Court by the national State of the detained person”, as settled by the International
Court of Justice in LaGrand198, where it was proved that the United States of America
“breached its obligations to the Federal Republic of Germany and to the LaGrand
brothers” –a violation not only towards Germany, as a State, but also towards two
German detainees who were not timely informed of their right to consular protection199.
Individuals further have legal personality in international criminal law, starting with the
use of Chapter VII of the UN Charter for the establishment of the International Criminal
Tribunal for the Former Yugoslavia (and Rwanda), later consolidated under the Rome
Statute for the International Criminal Court. Tadic was a paradigmatic case because it
definitely safeguarded the legal foundations and guarantees of such tribunals as well as
their legitimacy ratione personae and ratione materiae. An especially inspiring
sentence in Tadic states that “[i]t would be a travesty of law and betrayal of the
universal need for justice, should the concept of State sovereignty be allowed to be
raised successfully against human rights”200. In sum, individuals have rights and duties
recognised under IL, most of the time indirectly through the duties imposed on States
(and exceptionally, directly, as in international criminal law).
197 As a curiosity, the Italian doctrine has addressed the role of individuals in international law since 1950: G. SPERDUTI: L’individuo nel diritto internazionale: Contributo all’interpretazione del diritto internazionale secondo il principio dell’effettività, Milan 1950, Giuffrè Ed. The best representative of the modern Italian doctrine would be Antonio Cassese, according to whom “it would be not only consistent from the viewpoint of legal logic but also in keeping with new trends emerging in the world community to argue that the international rights in respect of those obligations accrues to all individuals”. A. CASSESE: International Law, Oxford 2005, Oxford University Press, p. 145. Also in support of this thesis: F. MASTROMARTINO: “La soggetività degli individui nel diritto internazionale”, in Diritto e questioni pubbliche, No. 10 (2010), pp. 415-437, Palermo 2011. 198 INTERNATIONAL COURT OF JUSTICE (ICJ): LaGrand (Germany v. United States of America), Judgment of 27 June 2001, I.C.J. Reports 2001, p. 466 ff., para. 77 (at p. 494) –emphasis added. 199 Ibíd., para. 128.3 (at p. 515). Moreover, the ICJ established for the first time that her previous order of 1999 including provisional measures suspending LaGrand’s sentence to death pending the final decision of the ICJ “was not a mere exhortation” but “was consequently binding in character and created a legal obligation for the United States” (para 110). However, the USA executed both brothers disregarding the order alleging that “there is substantial disagreement among jurists as to whether an ICJ order indicating provisional measures is binding” (para. 112). After LaGrand, it is considered settled case law that orders including provisional measures issued by the ICJ are binding ever since. 200 Prof. Cassese (cited supra, footnote 197) was the Presiding Judge in this seminal case. INTERNATIONAL CRIMINAL TRIBUNAL FOR FORMER YUGOSLAVIA: Prosecutor v. Dusco Tadic a/k/a “Dule”, Decision on the Defence Motion for Interlocutory Appeal on Jurisdiction, of 2 October 1995, para. 58.
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Concerning corporations, the ICJ early warned that the “corporate personality represents
a development brought about by new expanding requirements in the economic field” in
such a way that “[t]hese entities have rights and obligations peculiar to themselves”201.
In Diallo, the ICJ conferred independent legal personality to a corporation only if the
legal system of the State of nationality (or incorporation) does so and, in that case, this
amounts to “granting it rights over its own property, right which it alone is capable of
protecting”, and even “diplomatic protection” by the State of nationality against any
wrongful act of a third State202. States usually take up a corporate interest and defend it
before the WTO Appellate Body; it is far from unusual to see corporate lawyers or
representatives among the members of a State delegation in such cases203. In a more
direct way, corporations also acquire rights and duties under Treaties of Friendship,
Commerce and Navigation, Bilateral Investment Treaties and other International
Investment Agreements or international contracts between States and private actors,
legal forms that generally include dispute resolution mechanisms under the 1965
Washington Convention on the Settlement of Investment Disputes between States and
Nationals of Other States (hereinafter, ICSID Convention)204. At the same time,
enterprises have started to make their own some “human rights”, initially within the
Council of Europe in the particular fields applicable to them, such as procedural aspects
(mainly, the right to a fair trial205), right to property206, freedom of expression207 and
201 ICJ: Barcelona Traction, Light and Power Company, Limited, Judgement, I.C.J. Reports 1970, para. 39. In other words, the ICJ recognises that “international law has had to recognise corporate entity as an institution created by States in a domain essentially within their domestic jurisdiction” (para. 38). 202 “What matters, from the point of view of international law, is to determine whether or not these have a legal personality independent of their members. Conferring independent corporate personality on a company implies granting it rights over its property, rights which it alone is capable of protecting. As a result, only the State of nationality may exercise diplomatic protection on behalf of the company when its rights are injured by a wrongful act of another State. In determining whether a company possesses independent and distinct legal personality, international law looks to the rules of the relevant domestic law”. ICJ: Ahmadou Sadio Diallo (Republic of Guinea v. Democratic Republic of the Congo), Preliminary Objections, Judgment of 24 May 2007, I.C.J. Reports 2007, p. 582 ff., para. 61 (at p. 605). 203 On the indirect means by which TNCs participate in the WTO dispute settlement mechanism, see generally: C. MANRIQUE CARPIO: “Las empresas transnacionales en la Organización Mundial del Comercio”, in V. ABELLÁN HONRUBIA and J. BONET PÉREZ (Dirs.): La incidencia de la mundialización en la formación del Derecho internacional público: los actores no estatales. Ponencias y Estudios, pp. 177-218, at pp. 201-204. 204 P. MUCHLINSKI: “Corporations in International Law”, in Max Planck Encyclopedia of Public International Law, June 2014, para. 21 and 26-29. An auxiliary issue is the determination of the corporate nationality, on which there is no customary practice yet a no agreement between the ICJ and ICSID, since there are conflicting national systems based on corporate domicile, corporate nationality, and other factors; however, these details do not challenge the fact that corporations are recognised as partial legal subjects at the international level. 205 Cases of the European Court of Human Rights declaring a procedural human rights violation in favour of a legal entity, e.g.: Sud Fondi Srl and Others v. Italy, 20 January 2009 (violation, inter alia, of article 7 of the ECHR –no punishment without law), Sacilor-Lormines v. France, 9 November 2011 (violation of
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even the right to respect for private and family life208. The most recent and, probably,
famous case was won by the oil company Yukos against Russia, an important judgement
also because of the great deal of money involved209. The European Court of Human
Rights condemned Russia for a violation of the right to property and the right to a fair
trial210. For the moment, at a regional level (Council of Europe), it is not unreasonable
to conclude that the European Court of Human Rights has recognised an incipient
corporate locus standi on the international plane, as it undoubtedly happens with arbitral
tribunals211. It can therefore be stated that, similarly to individuals, different fields of IL
recognise, at least, a partial legal subjectivity of corporations and, again, most of the
time indirectly –because of the States’ willingness to accept it.
It goes without saying the remaining prominence of States, which are still “autonomous
subjects” while individuals could be described as “passive subjects”212, a category that
article 6.1 –right to a fair trial), Agrokompleks v. Ukraine, 6 October 2011 (same violation), Capital Bank AD v. Bulgaria, 24 November 2005 (same violation of art. 6, inter alia), Regent Company v. Ukraine, 3 April 2008 (also art. 6 inter alia), Västberga Taxi Aktiebolag and Vulic v. Sweden, 23 July 2002 (in this case related to taxes concerning a taxi company), 206 In Sud Fondi Srl v. Italy, cited above, the European Court of Human Rights also declared the violation of the right to property (article 1 of Protocol 1); other examples of violations of the right to property in favour of corporate entities at: Centro Europa Srl and Di Stefano v. Italy (7 June 2012), again Agrokompleks v. Ukraine (6 October 2011), Capital Bank AD v. Bulgaria (24 November 2005), Regent Company v. Ukraine (3 April 2008), Aon Conseil et Courtage S.A. and Christian de Clarens S.A. v. France (25 January 2007), S.A. Dangeville v. France (16 April 2002, in this case related to taxation law), Buffalo Srl in liquidation v. Italy (03 July 2004), Eko-Elda Avee v. Greece (9 March 2006, again with regard to taxes), Stran Greek Refineries and Stratis Andreadis v. Greece (9 December 1994, in this case concerning an expropriation). 207 This problem under article 10 of the ECHR usually concerns newspapers, telecom companies and media. In the following cases the company at stake wins the case because of a violation of freedom of expression: Verlagsgruppe News GmbH v. Austria (No. 1 and 2), of 14 December 2006; Axel Springer AG v. Germany, of 7 February 2012; Financial Times Ltd. And Others v. the United Kingdom, of 15 December 2009; Sanoma Uitgevers B.V. v. The Netherlands, of 14 September 2010; MGN Limited v. the United Kingdom, of 18 January 2011 (involving the famous model Naomi Campbell); and Glas Nadezhda EOOD and Anatoliy Elenkov v. Bulgaria, of 11 October 2007 (concerning a denied broadcast licence). 208 In André and Another v. France, of 24 July 2008, a lawyer and a law firm won a case in which a tax inspection was considered by the Court as disproportionate, in violation of art. 8 (respect for private and family life) jointly with the violation of article 6.1 (right of access to court). 209 The Court reserved the decision on just satisfaction, which was delayed two years and finally condemned Russia to pay up to one billion, eight hundred sixty six million, hundred and four thousand six hundred thirty six euros to the company. ECtHR: Case of OAO Neftyanaya Kompaniya Yukos v. Russia, Judgement on Just Satisfaction of 31 July 2014, Application No. 14902/04. 210 ECtHR: Case of OAO Neftyanaya Kompaniya Yukos v. Russia –Judgement on merits of 20 September 2011, Application No. 14902/04. 211 Article 25.2 of the ICSID Convention confers the locus standi to any natural or juridical person which had the nationality of a Contracting State other than the State party to the dispute, accepting in exceptional cases the same nationality if, de facto, foreign control of the company is proved. 212 K. PARLETT: The individual in the International Legal System. Continuity and Change in International Law, Cambridge 2010, Cambridge University Press, p. 357.
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might be extrapolated to the legal standing of TNCs213. These categories (autonomous
and passive subjects) could be criticised as the “reappearance of the dichotomy in
different clothes”214. Anyhow, it does not change the reality behind theorisations: States
are still the enablers of the partial legal personality of both individuals (natural persons)
and TNCs (legal persons) in the international system. At the end, indeed, this partial (or
passive) subjectivity still depends on the States’ willingness to bind themselves through
treaties and recognise it. No matter how “passive” they are, individuals are not only
right bearers, they have certain obligations as well (as seen in international criminal
law).
Of course, this evolution has its origin in the Nuremberg trials; Clapham suggests that
the development of IL will require, sooner or later, additional international duties of
individuals, in particular, civil duties “if we do not want the development of
International Law to stagnate”215. This links the problems objects vs. subjects with a
subsidiary dichotomy, i.e., rights vs. duties. At first sight, we would disagree; however,
the evolution described above in relation to international personality shows that the
price individuals have had to pay (international criminal liability for gross violations) is
rather cheap and exceptional compared to the benefits obtained (human rights). The
apparently slower (though steady) development of the international personality of
corporations might respond to the fact that they have a lot more to lose in comparison to
individuals, or at least many TNCs think so. In order to offset corporate fears of
advancing their partial legal personality, it must be recalled that, besides investment’s
protection, we have signalled that corporations already enjoy human rights protection in
the limited fields applicable to them –although this field is in its infancy, its greater
development may promote a better balance between TNCs rights and duties.
Rosalyn Higgins, former President of the ICJ between 2006 and 2009 (and first female
judge in that institution), proposed an alternative nomenclature: the term “participants”
would include “transnational corporations and natural persons –who engage in
213 “It would be difficult to understand why individuals may acquire rights and obligations under international law while the same could not occur with any international organisation, provided that it is an entity which is distinct from its members”, as it happens with TNCs. A. CLAPHAM: “The Role of the Individual in International Law”, in European Journal of International Law, Vol. 21 No. 1 (2010), pp. 25-30, at p. 30. 214 As a commentator says in a book review of the citation above: A.T. MÜLLER: “Book Review: K. Parlett, The individual in the International Legal System…”, in European Journal of International Law, 23 (2012), pp. 294-299, at p. 297. 215 A. CLAPHAM: op. cit., ibid.
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international activity”216. Higgins term was quite successful in the literature and it has
been considered a “valuable” framework to explain the increasingly prominent role of
TNCs as “instigators” and highly “influential actors”, with limited rights and, why not,
duties217. It is therefore unrealistic to state that individuals and TNCs are mere ‘objects’
of International Law and thus bypass the debate on their responsibilities. It is our
understanding that the partial legal personality of both individuals and TNCs should be
enough to facilitate and enable the “subjection of MNCs de facto sovereignty to global
regulation with regard to human rights”218. This is certainly an on-going development
but “the obstacles created by public international law are not insuperable”219.
A new treaty? Rights, duties and the current regime
As we can see, the controversies revived by the UN initial leadership have turned
around a few blocking dichotomies (objects vs. subjects, rights and duties of non-State
actors, direct or indirect obligations, mandatory or voluntary schemes220, etc.). It can all
be condensed into a simpler question: is the treaty route worthy? The question is
pending since 2003, after the failure of the UN Draft Norms, the first binding project to
place direct duties on TNCs, to provide a closed list of rights and to include
enforcement. Would it be better to reactivate that effort and work on a future treaty on
business and human rights? After all, Resolution 26/9 of the HRC created an
intergovernmental working group to start working on an eventual binding instrument. Is
the customary way not ambitious enough? To what extent the progressive interpretation
of existing instruments can be useful to improve corporate human rights respect?
Even here, Res. 26/9 is keen to “stress that the obligations and primary responsibility to
promote and protect human rights and fundamental freedoms lie with the State, and that
216 R. HIGGINS: Problems and Process: International Law and How we Use It, Oxford 1994, Oxford University Press, p. 49 (and, generally, chapter III). 217 R. McCORQUODALE: “Pluralism, Global Law and Human Rights: Strengthening Corporate Accountability for Human Rights Violations”, in Global Constitutionalism, Vol. 2 No. 2 (2013), pp. 287-315, at pp. 291-294. 218 E.F. BYRNE: “In lieu of a Sovereignty Shield, Multinational Corporations should be Responsible for the Harm they Cause”, in Journal of Business Ethics, Vol. 124 (2014), pp. 609-621, at p. 619. 219 P. MUCHLINSKI: “Implementing the New UN Corporate Human Rights Framework: Implications for Corporate Law, Governance and Regulation”, in Business Ethics Quarterly, Vol. 22 No. 1 (January 2012), pp. 145-177, at p. 154. 220 For a closer look at the problem of soft law vs. hard law, please, refer to section 3 of chapter II and section 1 of chapter IV (in relation to the EU).
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States must protect against human rights abuse within their territory and/or jurisdiction
by third parties, including transnational corporations”221. Then, what’s new compared to
the current and incipient development of indirect horizontal duties? Is it a good idea to
promote a proper treaty just to be able to allocate direct duties instead of further
developing and detailing horizontal duties indirectly, through States obligations?
In this vein, a particularly enlightening article by John Knox systematises this universe
of dichotomies. Eventual duties of private actors can be “converse duties” (“owed to the
State”, mainly obey the law, pay taxes and comply with the civil or military service) or
“correlative duties”, which are those between private actors derived from the respect of
other’s rights. Business and human rights issues correspond to “correlative duties”,
which most of the time indirectly emanate from IL and are directly provided by national
law222. Through a meticulous examination of the drafting process of the main human
rights treaties, John Knox shows that the drafters debated on the appropriateness of
listing duties, as opposed to human rights, but concluded that risks outweigh the
benefits in regard to the spirit of human rights law, to the extent States could use such
duties to limit their own commitment, but “[t]his approach did not result from the belief
that international law could place duties only on States”. On the contrary, IHRL already
comprises correlative private duties, but most of the time indirectly, through national
legislation (implementing International Law). Knox draws a pyramid of correlative
private duties to summarise this issue, which we represent below. In many ways, the
treaty route (or similar instruments) is interested in moving private duties from the
second to the third level of the pyramid below by creating direct duties; the current
system implies a gradual evolution from the first to the second level of this pyramid.
According to Knox, and we fully agree, the treaty route diverts attention from the
fundamental problem in this field: the effective implementation of human rights law,
which is not solved by just creating direct obligations. In this sense, “[p] roposals to
move such duties directly to the third level are distractions from the real need, which is
to give the [private correlative] duties greater specificity so that they might be more 221 UN Doc. A/HRC/RES/26/9, recital 7 (at p. 2). 222 John Knox further proposes a test for the suitability of -eventual- private correlative duties: they must do “no harm” (be only correlative without opening the door for converse ones, allowing the State to limit human rights arbitrarily), and “do some good” (by clarifying existing indirect duties and reinforce the current human rights regime). J.H. KNOX: “Horizontal Human Rights Law”, in The American Journal of International Law, Vol. 102 No. 1 (January 2008), pp. 1-47, at p. 2. For this author, the UN Draft Norms precisely failed at the second level: they abandon indirect correlative duties and take the ‘direct duties’ route, therefore alleviating current States’ duties –thus not improving the current system (Ibíd., pp. 37-40).
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effectively implemented domestically”223. This is, in fact, the task of the UN Working
Group of five independent experts, whose current priority is to expand national action
plans in this field while consolidating a wider practice and consensus on indirect
correlative duties upon TNCs.
Diagram No. 2: Pyramid of correlative private duties under IHRL*
* Own elaboration based on J.H. KNOX: “Horizontal Human Rights Law”, The American Journal of International Law, Vol. 102 No. 1
(January 2008), pp. 1-47, passim.
In summary, International Law can allocate rights and duties to non-State actors, such
as individuals and corporations, but most of the time indirectly, mediating the
imposition of obligations to States and their permeation into the internal legal orders.
We have cited examples in treaties and jurisprudence that show this partial legal
subjectivity and a limited locus standi of non-State actors at the international level, in a
variety of fields (IHRL, investment’s protection, diplomatic and consular law,
international criminal law). Monist or dualist, the true problem is the specification and
effectiveness of IHRL in domestic systems.
At a political level, we also agree with John Knox on several points. The negotiation of
a treaty is long, painful and uncertain. It should not be idealised. States can take
advantage of it and block some current developments of existing instruments with the
223 Ibíd., p. 45.
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diplomatic excuse that they do not want to interfere with the content and orientation of
an open negotiation. We would equally have to wait for the ratification by a number of
States for its eventual entry into force; let’s recall that the HRC’s resolution creating the
open-ended intergovernmental working group on this issue was not adopted by
consensus: a narrow vote of 20 to 14 with 13 abstentions. Furthermore, Japan, the USA
and many European countries (Austria, Czech Republic, Estonia, France, Germany,
Ireland, Italy and the UK) voted against, being the home-States of most TNCs.
The proposal of direct obligations upon non-State actors is very problematic; we risk
seeing States wash their hands in some cases alleging that it is TNCs’ responsibility, not
admitting any public responsibility, not even in vigilando. Ruggie already warned about
this risk224. Such a treaty could seriously slow down the current human rights regime
and, in the long term, be less beneficial than desired or needed. We have further
explained that most specialised human rights treaties (on racial discrimination, on
women, on persons with disabilities, on the rights of the child, on apartheid in sports,
etc.) already have, indirectly, quite significant repercussions inter privatos, in the form
of horizontal obligations through the national implementation of IL, if correctly applied.
In the field of anti-discrimination, it early became clear its horizontal vocation (besides
the obvious vertical consequences for States and public administrations), and somehow
constitutes the historic origins of indirect horizontal obligations under IHRL.
Lest we forget, important indirect horizontal effects on non-State actors are also
traceable in other fields, to name a few relevant examples: the 1992 Brussels
Convention on Civil Liability for Oil Pollution Damage225; the 1997 OECD Convention
on Combatting Bribery of Foreign Public Officials in International Business
Transactions226; the same year Kyoto Protocol to the UN Framework Convention on
224 “A government can deliberately fail to perform its duties […] in the hope that the company will yield to social pressures to promote or fulfil certain rights”, J.G. RUGGIE: Just Business…, op. cit., pp. 50-51. 225 Article III states that “the owner of a ship at the time of an incident, or where the incident consists of a series of occurrences, at the time of the first such occurrence, shall be liable for any pollution damage caused by the ship as a result of the incident”. The International Convention on Civil Liability for Oil Pollution Damage, adopted 29 November 1969 (entry into force: 19 June 1975), was replaced by this 1992 Protocol, adopted on 27 November 1992 (entry into force: 30 May 1996). 226 Interestingly, article 2 sets the “liability of legal persons for the bribery”. Though affecting for the moment foreign public officials, its article 1.1 establishes it is an offence “for any person intentionally to offer, promise or give any undue pecuniary or other advantage, whether directly or through intermediaries […] for that official or for a third party, in order that the official act or refrain from acting in relation to the performance of official duties, in order to obtain or retain business or other improper advantage in the conduct of international business”. The OECD Convention on Combatting Bribery was adopted on 21
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Climate Change227; 1999 Protocol to the Basel Convention on Liability and
Compensation for Damage Resulting from Transboundary Movements of Waste and
Their Disposal (not yet into force228); the 2003 UN Convention on Corruption229; and, at
the Council of Europe, we could cite the European Convention on the Protection of the
Environment Through Criminal Law (1998, not yet into force230).
Against the problematic proposal of direct obligations, the instruments cited above
rather show the potential of indirect horizontal effects through the national
implementation of IL. We shall stress that, whilst improving and deepening indirect
horizontal obligations, some of the latter conventions have not entered into force yet
revealing the remaining difficulties to convince States. A proper treaty on business and
human rights would have to face two additional problems: whether to list rights or
duties, and upon what terms, a process that might derive into a lowest common
denominator agreement, who knows if slowing down the development of the current
human rights regime. A decision would have to be made as to whether accompany the
treaty with an additional or optional protocol to ensure the existence of an
internationally binding mechanism to supervise its compliance. Otherwise, no matter
how “hard law” it will be, at the end its practical impact could be questioned. To end
this recap, we need not forget the sluggish speed of signatures and ratifications and the
uncertainty of eventual reservations, as with any treaty.
November 1997 and entered into force on 15 February 1999. It has now 41 signatories among which all OECD Member States plus 7 non-OECD States. 227 Articles 10 and 12, inter alia, include explicit mentions to the “private sector”. The Kyoto Protocol was adopted on 11 December 1997 and entered into force on 16 February 2005. 228 With 13 signatories and 11 States Parties, this Protocol has not entered into force yet. For example, article 4 on strict liability states: “The person who notifies […] shall be liable for the damage until the disposer has taken possession of the hazardous wastes and other wastes. Thereafter, the disposer shall be liable for damage. If the State of export is the notifier or if no notification has taken place, the exporter shall be liable for damage until the disposer has taken possession of the hazardous wastes and other wastes. […] Thereafter, the disposer shall be liable for damage”. For the status of ratifications, see www.basel.int (last accessed date: 9 December 2015). 229 This represents a very prominent step forward since it includes both private-to-public and private-to-private corruption situations. Finally, article 12 contemplates “proportionate and dissuasive civil, administrative or criminal penalties”. UN Doc. A/58/422, it entered into force on 14 December 2005. It currently has 178 parties and 140 signatories. Status of ratifications at http://treaties.un.org (last accessed date 1 December 2015). 230 Article 9 provides the “corporate liability”, which “shall not exclude criminal proceedings against a natural person”, for any of the actions covered by articles 2 (intentional offences) and 3 (negligent offences”. The latter articles further establish that such offences will be translated as “criminal offences” under domestic law. This treaty has been signed by thirteen countries; only one State has ratified it (Estonia) for the time being; it has not entered into force as far as it needs at least three ratifications. See: www.coe.int (last accessed date 1 December 2015).
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We face a fluid and changing scenario. A good example is the recent Statement of H.E.
Archbishop Silvano M. Tomasi, Permanent Observer of the Holy See to the United
Nations and Specialized Agencies in Geneva, on the occasion of the 26th Session of the
HRC, when the Resolution creating the intergovernmental WG on a binding instrument
was finally adopted by a narrow vote. In this statement, he acknowledged that it is
necessary a “smart mix of regulatory and policy approaches and incentives”, to
conclude however that “only a binding instrument will be more effective in advancing
this objective”231. As the saying goes, ‘the road to hell is paved with good intentions’: of
course, a binding instrument seems prima facie the ideal solution, but only if, in the first
place, we are aware of all the traps, risks and problems behind and, at a second stage, if
we succeed in annulling those adverse side-effects.
In the face of the difficulties of the treaty route, we consider it is preferable –for the
time being– to go on developing and improving the two current open paths: the
customary practice, with gradual efforts aimed at building a solid consensus in the long
run232; and the progressive interpretation of the existing instruments, as well as their
effective implementation to ensure their indirect horizontal implications upon non-State
actors (possibilities on which we further elaborate in the following chapter). Whatever
the case may be in the future, it is evident that the “debate has now moved on –from
‘why?’ be socially responsible to ‘how?’ ” 233.
Characteristics and definition of CSR
At this point, it is important to turn back to our understanding of the word
‘responsibility’ so as to construct the differential characteristics of CSR. It does not
consist of a chivalrous exercise of generosity. Far away from generosity, the term
‘responsibility’ is closer to some kind of ‘duty’, in terms of due diligence –though
undetermined, still a legal concept. Furthermore, we defend that the word “social”,
231 As cited and commented by: V. CAMARERO SUÁREZ and F.J. ZAMORA CABOT: “Apuntes sobre la Santa Sede y el tratado de empresas y derechos humanos”, in GLOSSAE European Journal of Legal History, No. 12 (2015), pp. 183-205, at pp. 197-200. The text of the Declaration is available at: http://www.vatican.va/roman_curia/secretariat_state/2014/documents/rc-seg-st-20140611_tomasi-diritti-umani_en.html. We wish to warmly thank Prof. Zamora Cabot for this interesting reference. 232 In fact, the task of the current WG of five independent experts under the HRC’s mandate to foster national action plan is a crucial mission in widening the international practice and eventual customary practice in the future. 233 J. ZERK: op. cit., p. 25.
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while having an origin centred on the environment and labour law, now entails in
popular usage a variety of other concerns that turns it into a general human rights
appeal. In this sense, even assuming the strict views of Friedman and Sternberg, we dare
say that charity and corporate philanthropy are actually much more illegitimate (if not
unlawful) than CSR, since they really constitute ‘arbitrary generous decisions’
disconnected from the type of business, its actual operations and its inherent
‘responsibilities’.
Let us provide some examples from different economic sectors. When a hotel decides to
donate a certain amount of money for the protection of cultural heritage in its own city,
this action is certainly praiseworthy and can also be in the hotel’s business interest. A
second option would be to use more environmentally-friendly cleaning materials and to
donate money for research and development (R&D) in this field. In our view, the latter
option constitutes a “human rights based approach” with a clear connection with the
type of business and its inherent operations and responsibilities: proper CSR. However,
the first option (a donation for cultural heritage) would rather constitute an exercise of
corporate philanthropy or, put otherwise, a “charitable approach” to CSR (for us,
improper and unfocused). An educational institution (a university) may organise awards
and prizes to recognise the work of local NGOs for their social action and, at the same
time, offer free public lectures of Nobel prizes (to whom the University pays). Again, a
different possibility would consist of an integral recycling plan (office equipment in
educational institutions is one of the highest items), combined with its own programme
of scholarships for students from disadvantaged backgrounds. The difference is
interesting: in the first case, it is a relatively charitable approach, which also benefits the
public image of the university but has a rather loose connection with the impact of its
proper operations; in the second case, in our view, it is a proper CSR initiative because
the connection with the operations at stake is stronger and it also has a more solid
human rights fundament. A third example could be a law firm (or any office): a
charitable approach may provide free legal assistance to the victims of a recent natural
disaster or fraud with great media impact, whereas a human rights approach would
inspire putting in place more comprehensive work-family reconciliation measures for
employees, especially women of childbearing age and to ensure the application of the
principle ‘equal pay for equal work’, or even installing presence detectors to avoid
excessive consumption of electricity (meeting rooms, corridors, etc.) and an automatic
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mechanism to ensure that all computers are turned off at the end of the working day.
Our fourth example is a big construction company: a philanthropic initiative would be
to donate 0’5% of incomes to a local NGO to combat hunger; a proper CSR policy
would ensure that all workers benefit from social security, to improve these social
benefits together with the occupational risk prevention plan. Within the textile industry,
major designers can organise after the terrorist attacks in Paris (November 2015) a
charitable fashion show or parade; but a proper CSR policy would address the usual
problems of pollution caused by industrial inks in developing countries (down the
supply chain) or workers’ rights. There are endless possibilities and examples; we shall
finish mentioning the food industry. Following the charitable approach to CSR would
lead to contribute to a local food bank. Contrariwise, a human rights and correct
approach to CSR would prioritise other actions strictly connected to the actual impact of
the company’s operations: for example, to refine the sell-by dates in order to avoid
undue food wasting in large supermarkets, or to invest in R&D to improve the health
standards of food products (and go beyond the minimum legal requirements).
Table No. 1: Characterising CSR: charity or human rights
Examples of businesses Charitable Approach (corporate philanthropy)
Human Rights Approach (proper CSR)
Hotel (Tourist industry) Donation for the protection of cultural heritage
Environmentally-friendly cleaning materials
Educational Institutions (a University)
Awards and Prizes. Free conferences.
Recycling office equipment Scholarships
Law firm (or any office) Free legal assistance to the victims of a disaster
Family-work conciliation measures. Electricity
consumption Construction company Periodic donations to a
local NGO Improve social security of
workers and the occupational risk prevention plan
Textile industry Charitable fashion show Supply chain policies to tackle pollution and
workers’ rights Food industry Contribution to a local
food bank Address the problem of sell-by dates and health
standards
Agricultural sector
Donate excesses of
production
Use of better sanitary and
phytosanitary products (with higher environmental
and health standards)
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Both options (charitable and human rights approaches to CSR) can have a positive
impact on public image and, perhaps, economic returns for the company, but in the case
of proper CSR initiatives the difference is that it will not always and necessarily imply
an economic saving or benefit234. Both can be praiseworthy. The objective is not to
denigrate philanthropy; this is only aimed at clarifying concepts and initiatives. Each
company has its own characteristics and our reaction to different corporate policies will
vary depending on them; furthermore, the concrete activities and operations of the
company will also be essential to determine our reaction and the way we assess the
adequacy of a particular CSR initiative: “For example, should Levi Strauss fund a
campaign to end racism? Should Ford contribute to finding a cure for AIDS?”235 Of
course there might be counter-examples and cases in which the distinctions are not clear
(no disappointment: it is a typical problem in social sciences).
We propose that there are three characteristic elements of CSR, taken as categories that
represent ideal types: 1) the close connection with the type of business and its inherent
operations; 2) a sustainability criteria, i.e., to prioritise long-term effects in social or
environmental issues leaving aside circumstantial and contingent approaches; 3) a solid
vocation to respect human rights. The concurrence of all three characteristics will mark
the likelihood of being closer to a truly CSR initiative, a human-rights-based one,
annulling by the way the usual critique according to which it is only about marketing
strategies and public image smokescreens. Unlike classical monetary approaches to
CSR, which focus on profit maximisation, our approach is centred on “social
preferences”, under which there are “mixed effects on profits” and, even sometimes, an
eventual short-term reduction, within the context of stakeholders-shareholders overlaps
and interactions236.
Bearing in mind the preceding analysis, the current situation can be summarised in the
following premises: 234 “All CSR activities are not profit maximizing, [only] some may be”. M.L. BARNETT: “Stakeholder Influence Capacity and the Variability of Financial Returns to Corporate Social Responsibility”, in The Academy of Management Review, Vol. 32 No. 3 (July 2007), pp. 794-816, at p. 813. 235 As persuasively notes Barnett: “Consider your reaction were Union Carbide to announce a $10 million donation to community hospitals in Bhopal, India, or were Exxon to announce a $10 million donation to improve wild-life habitats along the Alaskan coast. Now consider you reaction were Ben & Jerries to do either of the above.” Ibíd., p. 794 and 808 (citations). 236 M. KITZMUELLER and J. SHIMSHACK: “Economic Perspectives on Corporate Social Responsibility”, in Journal of Economic Literature, Vol. 50 No. 1 (March 2012), pp. 51-84, at p. 59.
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a) International Human Rights Law (IHRL) has generally focused –and almost
exclusively relied– on international treaties and traditional international
mechanisms that imply vertical effects and States’ responsibilities. The
progressive and positive evolution of IHRL must be acknowledged as a gradual
and on-going development (as seen in the case of ESCR).
b) Moreover, IHRL mostly consists of ex-post strategies aimed at remediation with
recurrent difficulties in preventing eventual violations. Even when violations
have already occurred, restrictions and problems arise when breaches involve
non-State transnational actors while we face fragmented jurisdictions;
c) The complexity of TNCs’ operations and the dynamics derived from
globalisation have led to an increasing interdependency between subjects of IL
and all kind of transnational actors in the international system, so that the
Westphalian self-sufficiency of States is being questioned to protect human
rights in their especially complex interaction with TNCs;
d) When TNCs (co-)participate in human rights breaches, classic doctrines emerge
to point out that, strictly speaking, only States and International Organisations
are proper subjects of the international system, added to limited liability veils.
Contrariwise, TNCs are clearly recognised as ‘right-bearers’ when it comes to
investments protection and in other cases, suggesting at least some kind of
international personality. In parallel, IHRL has introduced a partial legal
subjectivity of individuals, now even in the area of ESCR with the entry into
force of the Optional Protocol to the ICESCR.
In view of these premises, we propose the following definition of corporate social
responsibility: a complementary strategy to increase the horizontal effects of
internationally recognised human rights, mixing hard and soft law instruments, in their
particular interaction with the activities of all kind of business enterprises, with a
predominantly preventive vocation.
The definition we propose condenses important nuances, starting with the necessary
centrality of human rights within CSR, frequently forgotten or unfocused. Then, CSR’s
predominantly preventive vocation does not prevent it from including remediation (ex
post) procedures, but we understand that it is not its most developed facet for the time
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being and, more significantly, it might also constitute one of its most interesting
contributions to the current human rights regime since traditional instruments already
focus on remediation and not so much on prevention. In other words, a predominantly
preventive approach could complete some lacunae in the field of prevention in IHRL237,
in order to increase ex-ante the actual effectiveness of human rights, provided that pre-
existing hard law mechanisms continue to develop. The objective is to improve the
actual efficacy of existing instruments, rather than looking for new binding tools. In this
connection, CSR constitutes a complementary way to reinforce the international
protection of human rights, which should neither replace nor overrule treaty-based
bodies and obligations. The mixture and interaction between hard and soft law
instruments has already been seen in the context of the UN and will further be shown
with regard to other international organisations and the EU.
In conclusion, as it will also be argued in chapter II, the increasing practice of
International Organisations in this subject suggests a growing consensus that might be a
source of new customary obligations in the long term. It is in fact the practice of States
and International Organisations (IOs) that would be the source of that eventual new
international custom (the practice of private actors cannot be regarded as a source of any
customary obligation: the expansion of CSR in the private sector is the echo of the
growing concern at the level of States and IOs). This also justifies our primary
institutional approach focused on IOs. To sum up, instead of new instruments, this
research is based on the possibilities of: 1) building a wider international practice and
consensus to push CSR potential effects among States and IOs; 2) in its interaction with
treaty law, the effective implementation and, sometimes, the progressive
interpretation238 and reinforcement239 of existing instruments.
237 Prevention is certainly a pending task of IHRL. However, ‘preventive principles’ might be deduced from the current obligations under many instruments and, up to a certain point, constitute a part of States’ duties. See, generally: B. G. RAMCHARAN: Preventive Human Rights Strategies, London – New York 2010, Routledge Ed., passim. 238 Progressive interpretation seems to be, prima facie, absent of the Vienna Convention on the Law of Treaties, which includes the textual, contextual and teleological interpretation. However, it can be argued that the progressive interpretation falls within the latter (teleological), and a good amount of jurisprudence, both at a global and at a regional level, supports this idea, even more so if quasi jurisdictional bodies or dispute settlement organs are established by the treaty. F. PASCUAL VIVES: “Consenso e interpretación evolutiva de los tratados regionales de derechos humanos”, in Revista Española de Derecho Internacional, Vol. LVI No. 2 (July – December 2014), pp. 114-153, at pp. 122-126. 239 For example, instead of creating new institutions and new instruments, a good and necessary option is the reinforcement of UN Treaty Bodies, as signalled by Prof. Cardona, Member of the Committee of the
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CHAPTER II
The role of international organisations: open windows
2.1 Bringing orderliness in the work of international organisations
At the G-7 meeting in Germany (June 2015), the world leaders’ declaration explicitly
recognised the UN leadership and the UNGPs as the most authoritative framework to
guide any effort in our subject, putting the emphasis on the expansion of national action
plans (NAPs). Mention of NAPs and this political encouragement should not go
unnoticed: in the end, it will be the greater or lesser extension of CSR at a national level
the one able to build an international practice, apart from the primary inspiration or
guidance that IOs can provide. In the second place, the G-7 also committed to foster the
implementation of the OECD Guidelines and their correspondent National Contact
Points (NCPs); the leaders “will ensure that our own NCPs are effective and lead by
example”240. From this statement, of political value, we infer the increasing importance
of this subject and how it has managed to emerge as a permanent item on the agenda, as
said elsewhere in this work. We also deduce the unforgettable importance of States’
practice as a source of international norms and, apart from the UN, other international
organisations have participated in the common effort to convince States to act in this
subject matter.
2.1.1. Common aspects and institutional coordination of international standards
The prominence of the UN is, in reality, relatively recent taking into account that both
the OECD and the ILO have CSR-related initiatives in the 1970s. The UN has certainly
leaded the way, very significantly since the beginning of the 21st Century, but other
international organisations have made non-negligible efforts to promote CSR. The
Rights of the Child: J. CARDONA: “Los mecanismos institucionales para la protección de los derechos humanos como interés público global: el fortalecimiento del sistema de órganos de tratados de Naciones Unidas”, in N. BOUZA, C. GARCÍA and A.J. RODRIGO (Dirs.): La gobernanza del interés público global, XXV Jornadas de la Asociación Española de Profesores de Derecho Internacional y Relaciones Internacionales (Barcelona, 19-20 September 2013), Madrid 2015, Tecnos Ed., pp. 429-466, passim. 240 G7: Leaders’ Declaration, G7 Summit, Germany, 7-8 June 2015, p. 7.
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proliferation of instruments from different sources might have both positive and
negative effects. The outcome will depend on the degree of coordination and
consistency: the latter being a substantive issue impossible to achieve without the first,
we address first the institutional coordination. Coordination and consistency would
generate together a desirable convergence, in the words of John Ruggie:
“Convergence is desirable for two reasons. First, reducing the number of competing standards provides greater clarity and predictability for businesses and other stakeholders alike. Thus, it produces larger scale change and change that is more cumulative in its effects over time. Second, other major standard-setting bodies active in this domain have implementation capacities the UN lacks”.241
The variety of proposals coming from different IOs certainly poses problems of
coherence. For example, we still find a number of global initiatives insisting on the so-
called ‘business case’, according to which CSR is expected to generate economic
returns. The OECD seems reluctant to definitely abandon the ‘business case’ approach
(CSR is seen as “both a business responsibility and a business opportunity”242), yet we
have explained that CSR will not always have a positive impact on benefits. Where the
‘business case’ is more visible is in the International Organisation for Standardisation
(ISO), a non-governmental institution composed of private national standard-setting
associations. Among other motivations to buy the social responsibility standard of the
ISO (ISO 26000, at the price of 198 Swiss francs for a 106-pages’ document), we find
the possibility of gaining “competitive advantage, reputation, the ability to attract and
retain workers or members, customers, clients and users, the maintenance of employee
morale, commitment and productivity, [and] the perception of investors”243. In this line,
ISO 26000 leaves room for managerial discretion in relation to ‘due diligence’, which is
built on the basis of societal expectations and avoiding legal constructions, somehow
more linked to sustainable development rather than to proper human rights concerns244.
Of course, the ‘business case’ component, residually present in the OECD Guidelines
and strongly embedded in ISO 26000, is far away from our approach to CSR. However,
the OECD has recently aligned itself with the UN. Prof. Ruggie himself was invited to
participate in the meetings previous to 2011’ update of the Guidelines, with a view to
241 J. RUGGIE: Just Business…, op. cit., pp. 159-160. 242 OECD: Guidelines for Multinational Enterprises, Paris 2011, OECD Publishing, p. 44. 243 ISO: Discovering ISO 26000, 2014, available at www.iso.org. 244 A. JOHNSTON: “ISO 26000: Guiding Companies to Sustainability through Social Responsibility?”, in European Company Law, Vol. 9 No. 2 (2012), pp. 110-117, at pp. 114-116.
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coordinating discourses. In the current stage, coherence and consistency of global
initiatives start to be indispensable for the future success of CSR.
To start with, we wish to underline that, despite dispersion, the work of IOs –other than
the UN– actually confirms the definition of CSR that we propose. Even ISO 26000,
with all its limitations, has a strong point: its focus on prevention, which is essential in
our understanding of CSR. And both the OECD Guidelines and ISO 26000, though very
different, incorporate the necessary centrality of human rights as we propose. More in
detail, the latest version of the OECD Guidelines for Multinational Enterprises (2011)
includes a new chapter (No. IV), only on human rights, absent in the previous versions,
which strictly follows the language and contents of the UNGPs: it highlights that the
primary responsibility lies on States, that companies have to respect that framework,
prevent and avoid adverse human rights impacts and “provide for or co-operate through
legitimate processes in the[ir] remediation”245, thus implicitly including judicial and
non-judicial grievance mechanisms.
As far back as 2008 –before Ruggie’s work–, an unofficial ILO publication already
stressed that CSR “should not be defined as only ‘beyond the Law’”, because it also
includes “minimum regulatory standards” with a human rights approach246. Compliance
with the existing legislation is seen as a baseline; only a portion of CSR consists of
going “beyond the law”. Again, our definition also states that CSR mixes both hard and
soft law, mandatory and voluntary components, as summarised in the following
diagram:
Diagram No. 3: Legal composition of CSR
245 OECD Guidelines… (2011), p. 31. 246 INTERNATIONAL INSTITUTE FOR LABOUR STUDIES / ILO: “Governance, International Law and Corporate Social Responsibility”, Research Series No. 116 (2008), pp. 107-113.
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Finally, the OECD, the ILO and the ISO texts put the accent on risk assessments of
adverse human rights impacts, confirming again what we defined as a “predominantly
preventive vocation” of CSR. Unfortunately, none of the initiatives of IOs at a global
level –not even the UN’s– can be said to be complete and fully satisfactory. Each
definition incorporates some good points and presents some loopholes, a phenomenon
that is perfectly understandable given the dispersion and disconnection of the diverse
instruments at their source. Nevertheless, the fact of having found in the work of these
organisations the diverse elements of our definition of CSR gives cause for some
optimism (the human rights centrality, the predominantly preventive vocation and the
mixture of hard and soft law). This indicates that the work of IOs at a global level seems
to follow a similar direction. Undoubtedly, there is still pending work to systematise the
overlapping initiatives from different international organisations, for which the
institutional coordination is a prerequisite to deal with the almost infinite spheres of
interaction between business and human rights.
Also in this regard, we start to detect some progress in the form of policy transfers
between IOs. In our view, both revisions of the OECD Guidelines are partly a response
to the UN’s impulse of the global CSR agenda: the OECD Council revised the
Guidelines in 2000 and created the National Contact Points (NCPs), with non-judicial
grievance competencies, precisely when the Draft UN Norms had caused a vivid debate
and revitalised CSR. And the following update of the Guidelines (2011) incorporated
the above-cited new chapter on human rights. The establishment of the NCPs is
obligatory for those countries adhered to the Guidelines (45 States at the time of
writing247); the weak point is that most of them are established within a department of
the Ministries of the Economy and their independence and usefulness is constantly
under question, problems which are behind the amending purpose expressed by the G-
7248. It goes without saying that the OECD Guidelines constitute a soft-law instrument,
a set of recommendations by governments to companies, the effectiveness of which can
generate an endless debate. In the overall, we totally agree with Johnston’s assessment:
“Initially skeptic about the effectiveness of soft law, I quickly became an advocate after my arrival as Secretary General of the OECD. When an attempt to adopt a multilateral agreement on investment (MAI) foundered in 1998 […],
247 The official website is https://mneguidelines.oecd.org/ncps/ (last accessed date: 10 December 2015). 248 Further reference to the NCPs is made, in the context of the EU, at pp. 194-195. We propose there that the NCPs could be more wisely placed within the correspondent national human rights institution.
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it became clear that proposed conventions and treaties are not only targets for dissident groups, they also take years to negotiate and implement […]. At the same time, it would be naïve to think that a meaningful system of global norms could exist without binding regulation and formal deterrence. […] Future international regulation in some areas could emerge from gradual convergence and coordination of national practices. […] I would caution, however, against exaggerating the degree to which formal law enforcement can or should solve all the world’s problems. Soft law, as through the Guidelines, has an increasingly important role to play”.249
By the same token, one should ask ‘treaty advocates’ if the current 189 ILO
Conventions have proved to be the best way to promote labour rights. Of course, this
was somehow an expectable development given that labour relations have a stronger
historical inclination to hard norms (at least outside the US). This historical inclination
of labour relations to hard law has also a sound reason behind: the balancing of
employer’s power with the generally less power of workers, giving rise to principles
such as “in dubio pro operario” (similarly to the adagio ‘in dubio pro reo’ of criminal
law).
Notwithstanding this, the ILO is no stranger to soft law and CSR. The ILO has
produced two basic texts: the Tripartite Declaration on MNEs and Social Policy (1977)
and the Declaration on Fundamental Principles and Rights at Work (1998). As we have
said, CSR is a mix of hard and soft law (the ILO early pointed in that direction), so
these guidelines and recommendations need to be read jointly with the eight ‘core’ ILO
Conventions250. In fact, both declarations have the underlying objective of coordinating
diverse ILO conventions to foster their joint CSR-effect through soft-law guidance.
Besides, the International Labour Conference also approved the Annex of 1998’
Declaration on Fundamental Principles and Rights at Work, which establishes a unique
follow-up mechanism in a soft norm. The follow-up looks forward to promoting the
ratification of the eight fundamental Conventions, via State-by-State annual reports and
a global report, both reviewed by the Governing Body, so as to facilitate technical
cooperation and the gradual achievement of concrete goals. On their side, the successive
249 D. J. JOHNSTON: “Promoting Corporate Responsibility: the OECD Guidelines for Multinational Enterprises”, in R. MULLERAT: Corporate social responsibility: the Corporate Governance of the 21st Century, The Netherlands 2011, Wolters-Kluwer, pp. 275-284, at pp. 278-279. 250 In chronological order: the Forced Labour Convention (No. 29 -1930), the Freedom of Association and Protection of the Rights to Organise Convention (No. 87 -1948), the Right to Organise and Collective Bargaining Convention (No. 98 -1949), the Equal Remuneration Convention (No. 100 -1951), the Abolition of Forced Labour Convention (No. 105 -1957), the Discrimination (Employment and Occupation) Convention (No. 111 -1958), the Minimum Age Convention (No. 138 -1973) and the Worst Forms of Child Labour Convention (No. 182 -1999).
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revisions of the Tripartite Declaration on MNEs and Social Policy have included
mentions to the UN Global Compact and the MDGs and confirm that, from the point of
view of the ILO, recommendations are addressed also to “governments”, alongside
companies, workers and employers, unlike the OECD Guidelines, which are
recommendations to companies by member-States. In this line, the ILO states that these
objectives “will be furthered by appropriate laws and policies”251, anchored in “basic
human rights”252, therefore combining mandatory and voluntary schemes together with
legalist and political strategies. The Declaration on MNEs was completed in 1986 with
a dispute resolution mechanism on its interpretation253, which can be activated by any of
the three constituents – the intrinsic originality of the ILO in the international system.
Policy transfers may seem relatively evident between the UN and the ILO (an UN
Agency) and the OECD, cross-citing each other standards. A similar cross-fertilisation
can be studied in the particular case of the ISO 26000. We mentioned earlier that this
(private) standard had a more developmental and business-friendly approach, rather
than a proper human rights one. Though being business-oriented, ISO 26000 has a
positive aspect: unlike other famous ISO standards, it is not certifiable and thus reduces
the risks of creating a new “certification circus” related to CSR; in other words, it
remarkably reflected the “lack of desire to create another product for the
auditing/certification industry”254. ISO 26000 developmental approach can also be seen
as a positive aspect, in terms of an “inter-marriage” between CSR and the MDGs255, in
line with the UN strategy, which actually links human rights to development. In fact,
this tendency to unite human rights and development has been confirmed by the new
Sustainable Development Goals or 2030-agenda256, which continues to include many
ESCR such as health, education, the environment, food and adequate housing.
251 ILO: Tripartite Declaration of Principles Concerning Multinational Enterprises and Social Policy, revised version adopted by the Governing Body of the International Labour Office at its 295th Session, March 2006, art. 3. A fourth edition (not revised) was issued 29 August 2014 without changes by the Governing Body. 252 Ibíd., art. 1. 253 This is a task for the ILO Committee on Multinational Enterprises. It excludes overlapping with other ILO procedures of review of national law and practice, other Conventions and Recommendations or matters under the freedom of association procedure 254 The standard cited as by A. JOHNSTON: op. cit., at p. 112. 255 D. KATAMBA, C.M. NKIKO, C. TUSHABOMWE KAZOOBA, I. KEMEZA, S. BABIIHA MPISI: “Community Involvement and development: An inter-marriage of ISO 26000 and millennium development goals”, in International Journal of Social Economics, Vol. 41 No. 9, pp. 837-861. 256 UN Doc. A/RES/70/1, adopted 21 October 2015.
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Finally, although we see a de facto institutional coordination through policy transfers,
many of which start to be openly deliberate, we find sometimes more formal
cooperation agreements between organisations. Suffice it to cite the interesting
Memorandum of Understanding between the OECD and ISO in the area of social
responsibility, signed in 2008 to ensure that “ISO International Standard […] and ISO
activities relating thereto are consistent with and complement the OECD Guidelines”257,
through a mutual and timely communication, consultations, assistance and co-operation.
Consistency and complementarity are difficult to balance; but anyone would agree that
the express intention to do so is a must irrespective of the final result. We are already
used to inter-agency initiatives on particular matters and to see officers attending
meetings at the headquarters of other organisations depending on the subject, but this
MoU consists of going a step further: an institutionalisation of coordination that may
hopefully inspire similar institutional agreements in the future, perhaps in order to
include all relevant IOs in the area of CSR.
2.1.2. The challenge of substantive coordination
We have shown in the previous section that our definition of CSR finds support in the
work of IOs at a global level. We have also highlighted the common aspects of diverse
standards as a result of policy transfers between IOs and an increasing, though still
imperfect, institutional coordination. The next step should consist of promoting a joint-
reading of all these standards given the fact that there are overlapping initiatives
addressing the same issues from different perspectives.
Indeed, more and more IOs incorporate human rights concerns or related issues into
their daily activities, regardless of their founding priorities. Our objective now is to
show some sector-specific opportunities for coordination with substantive outcomes.
The following examples, in a non-exhaustive way, would merit a longer, in-depth and
distinct research; but our goal is just to suggest there are also substantive interactions
and opportunities for convergence of social responsibility standards and related
instruments.
257 Emphasis added. OECD – ISO: Memorandum of Understanding between the OECD and ISO in the Area of Social Responsibility, 5 May 2008, article 1.1.
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Within IHRL, environmental protection has always been the spearhead of a regulatory
evolution that has brought about improvements that start to be extended to other areas.
For example, environmental footprints are widely used by the industry and the fact of
being a quite easily quantifiable factor (including a strong ‘business case’) has
decisively helped environmental standards on their path to a prompt success.
International Environmental Law is a quite recent evolution within the history of IL, an
area in which we also find a good amount of soft norms258 but more and more binding
treaties, whose effectiveness in turn is discussable. We have already cited the 1992
Brussels Convention on Civil Liability for Oil Pollution Damage, the Kyoto Protocol to
the UN Framework Convention on Climate Change259. The level of specificity of these
treaties is also remarkable: suffice the additional examples of the International
Convention for the Conservation of Atlantic Tuna or the Convention for the
Conservation of Antarctic Seals, for the concreteness of their subject-matter and their
repercussion on private actors, and the Aarhus Convention on Access to Information,
Public Participation in Decision-making and Access to Justice in Environmental
Matters, for its procedural importance –an extraordinary formalisation of ‘procedural
human rights’. Two international environmental treaties await a sufficient number of
ratifications to enter into force: the 1999 Protocol to the Basel Convention on Liability
and Compensation for Damage Resulting from Transboundary Movements of Waste
and Their Disposal as well as the European Convention on the Protection of the
Environment through Criminal Law (1998). Moving to policies, environmental
objectives mainstream all UN agencies, as confirmed by the new Sustainable
Development agenda for 2030; even WIPO has jumped on the environmental wagon
and has developed an internet-based marketplace to facilitate intellectual property
services and databases for green technologies, which is by the way a good example of
PPPs.
For instance, the situation can be interpreted in terms of a progressive hardening of
previous environmental expectations, a process accelerated since the late 1980s.
Because of its early development, environmental protection has blazed a trail and has 258 A recent state of the art with examples and case studies at: J. FRIEDRICH: International Environmental ‘Soft Law’. The functions and Limits of Nonbinding Instruments in International Environmental Governance and Law, Max Planck Institute 2013, Springer Ed., passim. 259 On 12 December 2015, the 21st yearly session of the Conference of the Parties to the UNFCCC, and 11th session of the Meeting of the Parties to the Kyoto Protocol, adopted by consensus the Paris Agreement, updating the goals for the reduction of greenhouse gas emissions and limit the global warming to 2 Celsius degrees between 2030 and 2050 (compared to preindustrial values).
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always been one step ahead developing and intermixing hard and soft law instruments.
This evolution of environmental regulation has contributed to three achievements: 1) the
gradual inclusion of procedural aspects to operationalise simultaneous goals; 2) the
progressive hardening of previous soft-law aspects; 3) the coordination efforts by a
variety of IOs (both institutionally and substantially).
We observe similar improvements in the area of the right to food and agricultural
production. A highly topical human rights problem is food security while speculation in
the stock markets is said to be related to several food crises in Africa, in particular due
to the spectacular escalation of the price of corn after 2008’ crisis. The area of the right
to food and agriculture is also in advance in terms of international coordination,
including CSR instruments to tackle the current defies. Already in 2004, FAO issued the
Voluntary Guidelines to support the progressive realization of the right to adequate
food260, which take a transversal human rights-based approach, from good governance
to specific ESCR, like water and sanitation, food security and labour rights.
This path finally led to an unprecedented institutional and substantive co-operation: the
principles framework for responsible agricultural investments, adopted in 2009 by an
interagency working-group composed of FAO, IFAD, UNCTAD and WB, a strong call
for a global consensus. According to these principles, investments should not
“jeopardize food security” (principle 2) but respect the environment (principle 7) and
“existing rights to land” (principle 1)261. FAO has produced two additional guidelines:
in 2012, the Voluntary Guidelines on the responsible governance of tenure of land,
fisheries and forests262 and, in 2014, the Principles for Responsible Investment in
Agriculture and Food Systems263. We could also add FAO’s Code of Conduct for
Responsible Fisheries and the International Code of Conduct on the Distribution and
Use of Pesticides, more clearly calling upon companies, apart from the usual regulatory
responsibility of States. In summary, the current polemic turns around large scale land
acquisitions (“land grabbing”) and the respect of the environment to ensure a
sustainable agriculture.
260 Adopted by the 127th Session of FAO Council, November 2004. 261 FAO – IFAD – UNCTAD – WB: Principles for Responsible Agricultural Investment that Respects Rights, Livelihoods and Resources (Extended version), 25 January 2010. 262 Adopted by the Committee on World Food Security (FAO), 38th Special Session, 11 May 2012. 263 Adopted by the Committee on World Food Security (FAO), 41st Session, 15 October 2014.
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In today’s economy, the ever-growing complexity of supply chains is not limited to the
industrial sector and widely affects food products, which has marked a new priority in
this subject. The OECD and FAO are currently working on a joint voluntary Guidance
for Responsible Agricultural Supply Chains264, therefore continuing their coordination,
at an institutional level but also on the substance. The most recent example is the joint
FAO-UNIDROIT Legal Guide on Contract Farming, where specific human rights
concerns are straightforwardly addressed: it directly cites the UNGPs as a source of
inspiration265 and recognises the intertwining of technical standards with several human
rights, on which it assumes their interdependency266. This Legal Guide even states that
Companies should respect human rights regardless of the local enforcement deficits at
the government level, including procedural aspects like “participation, accountability,
empowerment, non-discrimination, transparency, human dignity and the rule of law”267.
In this context of guidelines and codes, public goods and concerns are more likely to be
introduced into private (contractual) relationships through certificates and standards that
promote it268.
All these instruments urgently need a joint reading, to be added to the numerous reports
of the UN Special Rapporteur on the Right to Food and the UNGPs, to cite the
framework within which it should be interpreted; only such an approach will help
moving from institutional coordination to substantive results. In this regard, it must be
ensured that the development of guidelines and soft norms allows a sector-by-sector
substantive operationalisation of CSR –as seen in the case of agriculture and food.
However, at the same time, the multiplication of standards should not undermine the
need for harmonisation (what we termed “coordination and consistency”). In any case,
even though so many people die of hunger every day, the right to food and agribusiness
264 The draft text and the agenda for negotiations are available at: http://www.oecd.org/daf/inv/investment-policy/rbc-agriculture-supply-chains.htm (last accessed date: 29 December 2015). 265 UNIDROIT – FAO – IFAD: Legal Guide on Contract Farming, Rome 2015, para. 34 (at p. 12). 266 “Emcompassing civil and political rights, as well as economic, social and cultural rights (such as the right to food, the right to health, the right to social security and the right to work)”. Ibíd., para. 41 (at p. 31). 267 Ibíd., para. 58 (at pp. 36-27). 268 F. CAFAGGI and P. IAMICELI: “Supply chains, contractual governance and certification regimes”, in European Journal of Law and Economics, Vol. 37 No. 1 (February 2014), pp. 131-173, at p. 170.
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are a good example to demonstrate that “convergence among CSR standards and
guidelines is in progress”269.
Finally, in a totally different area that allows us to introduce the following section on
trade and investments, besides the specialised work of the WB and the ICSID, or the
WTO, we should have a look at other instruments and proposals from other
organisations. In a particularly interesting and recent report, Mr. Alfred de Zayas, UN
Independent Expert on the promotion of a democratic and equitable international order,
has proposed to the General Assembly to request an Advisory Opinion from the ICJ on
the priority of the Charter of the United Nations and the United Nations human rights
conventions over other treaties –in particular, investment and trade arrangements270. In
this research, we basically follow the same approach as his report, based on article 103
of the UN Charter, article 38 of the Statute of the ICJ and the Vienna Convention on the
Law of Treaties, in order to conclude on the duty to make compatible human rights and
UN obligations with other concurring international obligations271.
However, the Independent Expert adopts a far more radical stance, compared to ours,
inasmuch he even promotes a categorical abolition of investor-State dispute settlements.
In our case, as it will be further developed in the following section, we adopt a more
nuanced and pragmatic approach to show that there is room for improvement and that
there are open windows to gradually mainstream human rights respect in trade and
investment disputes. Regardless of our differences of opinion with the Independent
Expert, we certainly support the idea that an emerging international practice reveals an
increasing consensus on the fact that human rights entail some transversal principles
that can also affect international economic law.
The practice surveyed so far indicates that IOs and many States seem to go in that
direction (mainstreaming human rights into any area), but it would be more delicate to
precisely select what human rights and principles have really evolved, or can finally
269 K. POETZ, R. HAAS and M. BALZAROVA: “CSR schemes in agribusiness: opening the black box”, in British Food Journal, Vol. 115 No. 1 (2013), pp. 47-74, at p. 58. 270 UN (General Assembly): Report of the Independent Expert on the promotion of a democratic and equitable international order, 5 August 2015, UN Doc. A/70/285. We wish to thank the Independent Expert for his kind invitation to various events during our internship in the UN (2013). 271 This means a joint reading of international obligations acknowledging the relational character of international law. We should not risk proposing a clear hierarchy, as explained elsewhere in this work (see the precedent section).
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crystallise, into customary obligations272. Such obligations would have to be based on a
consistent and generalised opinio iuris and praxis at the end of the journey. However,
we rather think that, if such a customary rule of respect for human rights has emerged, it
is more likely to affect only some selected principles on which we have scarce certainty,
and probably not all human rights –therefore not being very useful in the far richer area
of ‘business and human rights’. We essentially argue that, at this stage, it is rather
inadvisable to request an opinion from the ICJ –we further risk an ambiguous and
unhelpful answer, which is capable of blocking or slowing down the customary path
already initiated.
2.2 CSR and international trade and investments
As we have seen so far, when dealing with transnational companies’ respect for human
rights we need an interdisciplinary perspective –procedural law, commercial and labour
law, civil law, public and private international law…- to cover legal relations that go
beyond a single legal order or jurisdictional system. We are, therefore, projected to
almost any kind of legal relationship.
This is also why we need to analyse all actors, from States to private companies and
international organisations, trade unions and consumers and almost any civil society
organisation. We know globalisation mainly affects international trade and investments
but, in the last decades, international transactions and external investments have
significantly increased and, among other reasons, we might underline two:
1) Both the WTO and the World Bank (WB273), together with financial
institutions at a regional level and the private banking sector, finance a great
part of these investments;
272 In a different report, the above-cited Independent Expert even says it would extend to all human rights, including ILO and WHO Conventions. For this report see: HUMAN RIGHTS COUNCIL (UN): Report of the Independent Expert on the promotion of a democratic and equitable international order Alfred-Maurice de Zayas, 14 July 2015, UN Doc. A/HRC/30/44. 273 Please, note that the expression World Bank comprises the International Bank for Reconstruction and Development (IBRD) and the International Development Association (IDA). The expression “World Bank Group” refers to three additional institutions, besides the IBRD and IDA: the International Finance Corporation (hereinafter IFC), the Multilateral Investment Guarantee Agency (MIGA) and the International Centre for Settlement of Investment Disputes (ICSID). All are technically considered UN institutions. They were the result of the Bretton Woods negotiations (1945), when the IMF was also
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2) States protect foreign investors through three types of legal forms: bilateral
treaties (BITs), multilateral investment agreements (MIAs) and, more
simply, through international contracts between the State and concessionary
companies. In this way, governments protect those who directly or indirectly
finance projects, facilitating access to means of dispute settlement outside
the State’s jurisdiction.
As repeated elsewhere in this research, it is our understanding that, if there is any part of
the legal order that could be made relevant for all sectors and branches of law, this is the
case of international human rights law and its principles or, at least, core human rights’
principles that have penetrated into customary international law. In this vein, we should
emphasise again that we are mainly speaking of States’ obligations and their
responsibility of surveillance, also when it comes to private activities at the international
level. Even if States weren’t to have ratified specific human rights instruments, such as
the ICESCR, we need to recall some general obligations with regard to article 1 of the
UN Charter and the Vienna Convention on the Law of Treaties, which foresees the
resolution of international controversies “by peaceful means and in conformity with the
principles of justice and international law” (preamble) and “in good faith” (art. 31), in
conformity with “human rights and fundamental freedoms for all” (preamble). We can
obviously discuss the different degrees of compliance and standards, but it is recognised
a high degree of consensus on the essential or core human rights principles, which can
therefore be considered customary obligations regardless of the ratification of a specific
treaty274.
A widespread practice indicates that there are not watertight compartments in
International Law. To quote just one example, the ICJ settled in a very simple way that
“ [a] n international instrument has to be interpreted and applied within the framework of
the entire legal system prevailing at the time of the interpretation”275. It is precisely for
this reason that we find “general exception clauses”, “public interest clauses” in the
WTO agreements as well as recurrent references to general international law in some
created, in this case as a fully separate organisation, focused on monetary cooperation, development and balance of payments difficulties. 274 But only very few human rights would have reached that status, being useless taking into account the casuistry of ‘business and human rights’ issues. Of course, in some cases we may face erga omnes obligations: for example, if contemporary forms of slavery are detected, or racial segregation, States could adopt any measure against the transnational corporation eventually involved (from breaking contracts to any other enforcement mechanism). 275 ICJ: Advisory Opinion on Namibia, ICJ Reports 1971, para. 53 (at p. 31).
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interesting arbitral decisions. Ernst-Ulrich Petersmann, one of the most authoritative
scholars in this field, has repeatedly warned of the dangers of so-called ‘self-contained
regimes’ such as investment law in relation to public international law. We need
coordination and an integrated approach to diverse international legal fields in order to
tackle legal fragmentation, which is the reason “why international economic law fail[s]
to protect global public goods”, not being irreconcilable with the due “respect for the
legitimate diversity [and specificity] of international legal regimes”276 –we fully support
Petersmann’s diagnostic277.
We suggest below that there are practical examples, in which human rights have found
their way into trade and investments issues, although timidly. Nothing impedes this
practice from being extended and developed in the future; for instance, it is only a
question of progressive development of the current instruments, bearing in mind the
usefulness of referring to general international law as the only legal and legitimate
method to make compatible the increasing transnational economic activities with human
rights obligations. IOs role in regulating trade and investments shows a wider
acknowledgement of the ‘relational character’ of IL and the transversal effects of human
rights.
2.2.1 International investments and human rights
First of all, we propose that international organisations that finance foreign investments
have, at least, an institutional and procedural role to play to protect human rights, even
if their first legitimate objective might be the protection of their natural founding
priority.
The right to life and the right to health are prominent obligations of States under the rule
of law and this necessarily implies the right to drinking water. According to our analysis 276 E.U. PETERSMANN: “Why Does International Economic Law Fail to Protect ‘Global Public Goods’”, in A. LIGUSTRO and G. SACERDOTI (a cura di): Problemi e tendenze del diritto internazionale dell’economia, Liber Amicorun in onore di Paolo Picone, Napoli 2011, Ed. Scientifica, pp. 111-125, at p. 115. This thesis is further developed in E.U. PETERSMANN: International Economic Law in the 21st Century, Oxford 2011, Oxford University Press. 277 However, we disagree with the solution: Petersmann proposes a multilevel constitutional approach to international law; such a constitutionalist attitude towards IL forgets, in essence, that internal legal orders based on a variety of constitutional theories, are unfortunately quite far from being efficient providers of “global public goods”. In many occasions, pressure for improvement precisely comes from International Law itself.
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of the ICESCR (1966), no provision establishes that it has to be a free and public
service, but drinking water needs to be made accessible and fully available regardless of
its private or public management278. But economic and social rights usually require big
initial investments, where the conflicting interests can be large and complex.
Many investment contracts actually deal with basic public services (water, power, oil
and gas, telecommunications, transport and waste disposal), which are narrowly linked
to the enjoyment of economic, social and cultural rights. In many occasions, an
international investment contract constitutes the first step before the enjoyment of any
economic and social right in a developing country. Very frequent problems come up
also with private security services and its related aspects, touching on civil and political
rights. Sometimes tragically, we witness regular violations of the right to life and public
security or freedom of expression. The rights of indigenous peoples are, finally, another
recurrent problem in the operations of transnational companies, because of the remote
location of many natural resources.
Prevention measures could be put in place to avoid or reduce the potential negative
effects on the host community, most of the times involving the following problems: the
right to health, labour rights, forced evictions, the protection of cultural heritage and the
environment, each of them including important procedural dimensions (information,
consultation and public participation, access to justice plus effective and timely legal
protection279).
In a famous example, a gas pipeline through Chad and Cameroon led to a threat to
human rights in both Central African countries280. Amnesty International warned that
this threat was more likely to materialise if the investment agreement forgets, omits or
clearly hampers State’s international obligations in terms of human rights and the
management responsibility of concessionary companies. A consortium of companies
was extracting gas of the fields of Doba (southern Chad) to cross Cameroon with a
thousand kilometres pipeline to the Atlantic. It consisted of the biggest private
278 OHCHR: Frequently Asked Questions on Economic, Social and Cultural Rights, Fact Sheet No. 33, Geneva 2008, United Nations, p. 20. 279 Called “procedural human rights”, which started their consolidation in cases touching on the environment, a recurrent problem for TNC’s. 280
A good analysis of the case: A. Al FARUQUE: “Relationship between investment contracts and human rights: a developing countries’ perspective”, in Ph. SANDS, S. BHUIYAN and N. SCHRIJVER (Eds): International Law and Developing Countries. Essays in honour of Kamal Hossain, Leiden-Boston 2014, Brill-Nijhof, pp. 240-243.
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investment in Africa at that time and the consortium was composed of Exxon Movil and
Chevron, both American companies, and Petronas, the gas State company of Malaysia.
As it is often the case, this project was promoted by a number of investors, accepted by
the concerned governments, supported with World Bank loans, private export credit
companies and banks, some of which had already and voluntarily adopted social and
environmental standards. The project was deeply criticised as an invitation for Chad and
Cameroon to ignore their international obligations in terms of human rights. Particular
clauses allegedly prevented these countries from adopting measures that might disturb
the future of the project, even when such measures were meant to address a human
rights’ demand281. This possibility should be excluded of any agreement: as said before,
no international contract has its own life in a vacuum; it only exists in an international
legal context.
As for this particular case, in 2001 the President of Chad ordered that the head of
opposition be arrested and tortured because he was against the creation of the gas
pipeline. Even though it was one of the biggest investments foreseen in Africa, the
project linked a consortium of big oil companies and was financed by the World Bank.
The opposition to this project claimed that the rights of the citizens were not respected
and further raised the fact that landowners were harassed and threatened with death to
abandon their properties in order to place a pipeline instead of conducting a correct
expropriation process with due legal guarantees.
That’s when an NGO addressed the President of the World Bank asking for his help to
liberate the opposition leader. In this case, in spite of the general scepticism about the
effectiveness of using his “good offices”, and doubting that this case fell into his
competencies, Mr. Wolfensohn finally phoned the President of Chad and the head of
opposition was immediately liberated. This obviously opened a vivid debate and raised
several questions: to what extent the World Bank is responsible for investment projects
that end up in human rights violations (the WB, in itself, is not violating at any time
those rights); whether formal and informal ‘good offices’ are sufficient and adequate to
tackle these situations; and if there could be an better system to address human rights’
related issues. 281
E. MUJIH: “The regulation of Multinational Companies Operating in Developing Contries: A Case Study of the Chad-Cameroon Pipeline Project”, African Journal of International and Comparative Law, No. 16 (2008), pp. 83-99.
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In many cases that concern developing countries, projects are wrongly interpreted as
allowing companies’ operations without being held accountable in front of local
legislation in cases of alleged human rights violations. Amnesty International promptly
raised the question and the inherent contradiction with general international law, in the
sense victims would be deprived of any access to remedies creating inadmissible
obstacles for the realisation of human rights. In many countries the exploitation of
natural resources has contributed to worsening corruption, deteriorating social unrest,
conflicts and abuses. It is important to note that, as in the case of Chad and Cameroon
and most of the African countries, we face a situation of state fragility –if not failure282–
what makes the population particularly vulnerable, where the judicial system is
ineffective and, all in all, where it is more likely that the Governments succumb to the
companies’ pressure and interests. It consists of a delicate and precarious equilibrium
between economic development thanks to big investment projects, and the adverse
effects it might cause. Other NGO’s claim that some African governments carry out
prosecutions, tortures and massive murder to keep some oil reserves without population.
A number of cases were deemed crucial to convince international financial institutions
(IFI) to take some steps. Of course, there are precedents well before the Chadian case
exposed. Since the 1960’s, when the WB did not stop lending South Africa and Portugal
despite their apartheid and colonial policies respectively283, the CESCR has issued a
good amount of Concluding Observations284 detailing the negative impact of IMF-WB
actions on ESCR. It was argued that these IFI, being within the UN building, should –in
accordance with article 103 of the UN Charter– make their policies consistent with
wider UN priorities in terms of human rights285; nevertheless, this alleged organic link
with the UN, in itself, is unlikely to force substantive changes in view of the functional
independence of World Bank.
The problem starts with the “apolitical” character of IFI, whose operations must only be
guided by economic considerations. In particular, as it is well-known, article IV –
282 S.D. KAPLAN, Fixing fragile States. A New Paradigm for Development, Wesport (Connecticut), 2008. (See the summary: “Fixing Fragile States”, in Policy Review nº152 (December 4, 2008), in http://www.hoover.org/publications/policy-review. 283 Ignoring General Assembly Resolutions 2107(XX) and 2054(XX). 284 M. SSENYONJO: Economic, Social and Cultural Rights in International Law, Oxford-Portland 2009, Hart Publishing, pp. 128-129. 285 Ibíd., p. 134.
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Section 10 of the IBRD Agreement explicitly prohibits “political activity”286. The legal
framework of the WB has evolved or, rather, its interpretation, especially since the
Presidency of Wolfensohn. As shown by Roberto Dañino, former Senior Vice President
and General Counsel of the WB, the “concept of political interference in the context of
human rights has also evolved”287: the WB’s poverty alleviation and development
objectives can be legally articulated in terms of human rights, in line with the MDGs,
and consistently with art. 31 of the Vienna Convention on the Law of Treaties. Besides,
a country’s poor human rights record might also be read as a “financial risk”, according
to which the WB has to decide its loans. This work concluded that a distinction still had
to be made between economic and social rights and civil and political rights,
considering the latter outside the competencies of the World Bank.
It can be argued that there was a historic over-dependence on the President’s personal
capacity to conciliate conflicting interests288: in 1958, when holders of bonds issued by
Tokyo and the city agreed to request the President a plan; a year later in relation to some
goods confiscated by the British forces after their intervention in Egypt in 1956. This
was also true in controversies dealing with nationalisations: the power sector in Egypt
(1965) or some mining facilities nationalised in 1968 by the then Zaire (today DR
Congo). The good offices of the President were not limited to private-public
controversies; he also mediated in inter-State conflicts such as that between India and
Pakistan leading to 1960 treaty on the Indus River and its exploitation.
But it was urgent to find solutions less dependent on the “good offices” of the President
of the WB. The final trigger for the evolution of WB policies was Sardar Sarovar
Project in India (Narmada Project), a dam including water supply and drainage facilities
that could, on the one hand, significantly improve the population’s access to water and
286 “The Bank and its officers shall not interfere in the political affairs of any member; nor shall they be influenced in their decisions by the political character of the member or members concerned. Only economic considerations shall be relevant to their decisions, and these considerations shall be weighed impartially in order to achieve the purposes stated in Article I”. 287 Internal human rights violations are no longer legitimate expressions of sovereignty out of international scrutiny: “sovereignty is no longer an absolute shield against scrutiny of States”. R. DAÑINO: “The Legal Aspects of the World Bank’s Work on Human Rights: Some Preliminary Thoughts”, in P. ALSTON and M. ROBINSON (Eds.): Human Rights and Development: Towards a Mutual Reinforcement, Oxford 2004, Oxford University Press, pp. 509-524, at pp. 519-520. 288 The following precedents are explained by Dr. Andrés Rigo Sureda, former Deputy General Legal Counsel of the World Bank at: A. RIGO SUREDA: “El Banco Mundial y los Bancos Regionales de Desarrollo”, in Curso de Derecho Internacional XXVII, Inter-American Juridical Committee of the Organization of American States, 2001, pp. 595-655, p. 634. We wish to express our gratitude to Mr. Rigo Sureda for his kind help and support.
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sanitation and the right to food (enabling better irrigation systems) in line with article 11
of the ICESCR; but on the other hand, it raised serious allegations of human rights
violations, in particular, damages to the environment and forced evictions. It was the
first time that the WB fell compelled to create an ad hoc group of experts (the Morse
Commission) to address this problematic situation; this case therefore constitutes the
direct precedent of the WB Inspection Panel, finally created in 1993289.
The progressive understanding of the WB’s Articles of Agreement has opened the door
to non-investment issues to support economic development, in particular through
informal interpretations that maintain a certain level of flexibility290. The practical
materialisation of this evolution came, as said before, with the Inspection Panel,
operative since 1994. With its quasi-judicial or arbitral function, the Panel allows
individuals (at least two, or more, comprising their representatives or NGOs) to seek
remedies if they consider that their interests or they themselves have been or could be
adversely impacted, direct or indirectly, because of a project (partly) financed by the
World Bank (IBRD and IDA)291. The procedure starts only if the Panel considers that
the request is not manifestly unfounded. In reasonable, the President of the Panel
informs the President of the WB and the Administration has 21 days to explain if the
loan has followed the Operating Procedures and if problems have already been
addressed. If this answer is considered unsatisfactory by the Panel, it can formally
request the Board of Directors the opening of a proper inquiry. Once authorised, the
President of the Inspection Panel appoints the inquirer/s (an “Investigation Team”) to
undertake such review, interviewing staff members and even conducting country visits
(which need to be authorised by the host State). Finally, the panel adopts an
investigation report with its recommendations. This report is sent to the Board and to
the concerned management departments, which have six additional weeks to exercise
their right of reply (the so-called “Management Report and Recommendation in
Response to the Inspection Panel Investigation Report”). Afterwards, the Board of
Directors and the President of the WB re-examine the whole question and adopt a final
289 Ibíd., pp. 641-642. Also see: D. FREESTONE (Ed.): The World Bank and sustainable development. Legal Essays, Leiden-Boston 2013, Brill-Nijhoff, pp.16-20. 290 A. RIGO SUREDA: “Arbitraje de inversión y desarrollo económico. La relación con el Banco Mundial”, in Arbitraje. Revista de Arbitraje comercial y de inversiones, Vol. III No. 2 (2010), pp. 357-375, at pp. 371-374. 291 Though rare, an Executive Director, or the Board acting as such, can also initiate an inspection procedure. The Inspection Panel is constituted by three individuals from different nationalities for a non-renewable five years term.
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decision on the merits and the recommendations.292 Requesters are informed within two
weeks after the Board’s meeting, including the public disclosure of the main documents.
In all phases, the borrowing or guaranteeing country is informed and updated, while the
Board can promptly adopt decisions on the subject matter without waiting to the end of
the Panel’s investigation or reports, allowing a greater flexibility in terms of rapid
response and effectiveness to ensure compliance with the Bank’s Operating
Procedures293. It can obviously be criticised that, from the very beginning, the Panel
needs the authorisation of the Board of Directors to effectively initiate an investigation,
and that the Board will also have the last word as to the eventual measures to be taken.
Moreover, since it is not a proper jurisdictional organ, the legal value of the decisions is
in doubt, the operations are not suspended just because an investigation is under
examination and requests are rejected if more than 95% of the loan has already been
disbursed.
Against this background, we shall recall however its originality and autonomy: for the
first time, an international financial institution creates an ad hoc but permanent
subsidiary organ at the highest level of the organisation, reporting directly to the Board,
with a strong institutional margin of manoeuvre to engage with all parties concerned,
thus bypassing technical barriers in terms of extraterritoriality and legal personality of
such parties (individuals, NGOs, TNCs in cases of guaranteeing countries or States
themselves as direct Borrowers and local companies). On the substance, the practice of
the Panel shows a progressive openness to general principles of IL, especially in the
interaction between international economic law and environmental protection, human
rights (indigenous peoples, minority rights, health, and labour law), poverty and
sustainable development, generating a sort of “osmosis”294 between the law applicable
by the Panel and those other fields. The institutionalisation of the Inspection Panel has
undoubtedly marked the evolution of the WB lending policies since 1994, moving from
literal – historicist to more finalistic – systematic interpretations of the founding
292 For a clear summary of these three phases, see: A. VITERBO: “Fondo Monetario Internazionale e Banca Mondiale”, in A. COMBA (a cura di): Neoliberismo Internazionale e Global Economic Governance. Sviluppi Istituzionali e nuovi strumenti, Torino 2008, G. Giappichelli Ed., pp. 189-244, at pp. 234-236. 293 The latest revision of the Inspection Panel’s Operating Procedures date April 2014 and are available at: www.inspectionpanel.org. 294 F. SEATZU: Il Panel di Ispezione della Banca Mondiale. Contributo allo Studio della Funzione di Controllo nelle Banche Internazionali di Sviluppo, Torino 2008, G. Giappichelli Ed., pp. 316-317.
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agreements295. At the same time, this has inspired other IFI: in 2001 the IMF instituted
the Independent Evaluation Office. At a regional level, only the Inter-American
Development Bank and the Asian Development Bank have similar accountability
mechanisms for the moment, which constitutes a minority of IFI.
The private arm of the WB, the IFC and MIGA established in 1999 the Office of the
Compliance Advisor/Ombudsman (CAO), whose 2007’ operational guidelines
recognise as authoritative legal sources the environmental and social requirements
“including international legal obligations” within the audit criteria296, perhaps implicitly
including soft law instruments since it ambiguously distinguishes between “legal and
regulatory requirements”. In the current CAO’s Operational Guidelines (2013) those
‘audit criteria’ have mutated into “compliance investigation criteria”297, a little harsher,
while an express mention of ‘business and human rights’298 issues is added. The IFC
Policy on Environmental and Social Sustainability establishes a set of eight
performance standards, which directly refer to diverse ESCR299, inasmuch the “IFC
recognises the responsibility of business to respect human rights independently of States
duties”300, thus confirming correlative private duties as we exposed in the first chapter.
Naturally, at the end it is “the responsibility of the client”, but the IFC commits to do
everything in its power to foster due diligence, in line with its own standards but
interestingly including “other internationally recognized sources”301. One cannot deny
the potential influence of the IFC over the international financial sector.
295 Ibíd., pp. 312-313. 296 “Audit criteria may have their origin, or arise from the environmental and social assessments or plans, host country legal and regulatory requirements (including international legal obligations), and the environmental, social, health or safety provisions of the World Bank Group, IFC/MIGA, or other conditions for IFC/MIGA involvement”. IFC/MIGA: CAO Operational Guidelines, Washington 2007, para 3.2 (at p. 21), available at www.cao-ombudsman.org. 297 IFC/MIGA: CAO Operational Guidelines, Washington 2013, para. 4.3 (at p. 23). 298 “This includes impacts related to business and human rights in the context of IFC Policy and Performance Standards on Environmental and Social Accountability”, ibid., para. 1.1 (at p. 4). 299 IFC performance standards are: 1) Assessment and Management of Environmental and Social Risks and Impacts; 2) Labor and Working Conditions; 3) Resource efficiency and pollution prevention; 4) Community Health, safety and security; 5) Land acquisition and involuntary resettlement; 6) Biodiversity conservation and sustainable management of living natural resources; 7) Indigenous peoples; 8) Cultural Heritage. IFC: Policy on Environmental and Social Sustainability, Washington January 2012, para. 5 (at pp. 1-2). 300 This includes the International Bill of Human Rights and the eight core ILO Conventions. Ibíd., para. 12 ( at p. 3). 301 According to the IFC, environmental and social due diligence typically includes the following key components: i) reviewing all available information, records and documentation related to the environmental and social risks and impacts of the business activity; ii) concluding site inspections and interviews of client personnel and relevant stakeholders, where appropriate; iii)analysing the business activity’s environmental and social performance in relation to the requirements of the Performance
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It is evident that the World Bank Group has ended up assuming that, institutionally, it
can play a positive role to pressure both governments and transnational companies to
pressurise them to respect environmental and social rights, particularly dealing with
their preventive – procedural dimension within investment operations (mainly, access to
information and consultation, more importantly in cases of needed resettlements of
populations or if indigenous peoples are involved). The WB Inspection Panel has
received 104 cases until 2015, only 34 of these were admitted to the next stage (actual
investigation) by the Board of Directors; in five cases, the Panel recommended to
undertake the investigation but the Board of Directors did not authorise it. Most
complaints come from Africa (31%) followed by the LAC Region (26%) and South
Asia (22%)302.
In summary, the institutional strategy of the WB was translated into two secondary
objectives: in the first place, it was important to clarify and ‘grease’ the relationship
between general international law and investment law, before analysing the place of
internationally recognised human rights and the eventual responsibility of the WB or IFI
in particular projects. This was done thanks to a progressive interpretation of the articles
of agreement. The WB leads the way303 but the numbers show there is still a long way
to walk. Lest we forget the vital role of States in their governing capacity of IOs. The
attention paid to the direct responsibility of the WB as a lending institution is, very
probably, “disproportionate” 304: legally speaking, the direct responsibility is more likely
to fall on recipient States; substantively speaking, problems touch the WB only
indirectly and institutionally. Financial institutions can play a role but, as member-
driven organisations, it is equally important to raise Member-States awareness of these
problems. In other words, the WB institutional responsibility has evolved in the
standards and provisions of the World Bank Group Environmental Health and Safety Guidelines or other internationally recognized sources, as appropriate; and iv) identifying any gaps therewith, and corresponding additional measures and actions beyond those identified by the client’s in-place management practices”. Ibíd., para. 28 (at p. 6). 302 Statistical data available at www.inspectionpanel.org. 303 The World Bank has currently undertaken a revision and update of its Environmental and Social Framework. The Second Draft for consultation, issued on 1st July 2015, is now under discussion and incorporate a strong emphasis on sustainable development. Available at http://consultations.worldbank.org/consultation/review-and-update-world-bank-safeguard-policies 304 Says Pasquale De Sena: “Senza escludere la poblematica della risponsabilità diretta di tali organizzazioni, [...] l’attenzione usualmente dedicata ad essa è, con ogni probabilità, sproporzionata”. This author further explains: “l’ipotesi della responsabilità degli Stati membri [...] possiede, perlomeno in astratto, una consistenza giuridica maggiore, rispetto a quella della loro diretta resposabilità [delle organizzazioni internazzionali]” P. DE SENA: “Fondo Monetario Internazionale, Banca Mondiale e Rispetto dei Diritti Dell’Uomo”, in A. LIGUSTRO and G. SACERDOTI: op. cit., pp. 829-858, at pp. 831 and 845.
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direction of forcing or increasing Member States substantive responsibility, especially
recipient States (as direct Borrowers or as Guaranteeing countries). Ultimately, the
Panel can be described as an instrument to put pressure on recipient States, rather than
on the Bank’s administration305, to comply with certain non-investment-related
minimum standards. In any case, this evolution has clearly moved from mere “good
offices” (a phone call in the Chadian case) to more predictable and better guarantees
(the Inspection Panel).
BITs, investment contracts, the ICSID and the place of human rights
Having said this, the World Bank or regional banks are not the only financial investors
for States. In reality, nearly 75% of world investments are actually financed by private
institutions: banks and credit agencies to exports and investments. Business-lead
initiatives have followed a very different approach and, as mentioned elsewhere in this
work, companies were more concerned with corruption, the environment and social
abuses in response to new societal expectations they were starting the detect in the
markets. In this line, the Equator Principles, launched in 2003 under the auspices of the
WB-IFC jointly with private banking houses, constitute the key code for the banking
sector. Entities and institutions that voluntarily declare their adherence to this soft law
instrument assume thereby their commitment to fostering sustainable investments and to
take into account social risks when financing a project. The Equator Principles were
followed by the UN Principles for Responsible Investment, another private-led code
established in 2006 further to the initiative of the UN Global Compact and the UNEP
Finance Initiative. Both the Equator Principles and the UNPRI constitute private-led
initiatives to foster soft instruments that reassemble public and private financial
institutions around some ethical standards and goals before green-lighting projects. The
Equator Principles have been adopted by 81 financial institutions from 36 countries
covering “over 70% of international Project Finance debt in emerging markets”306. In
theory, projects without an adequate social and environmental impact assessment would
be deprived of their financial support. The UNPRI defends six environmental and social
305 “El Grupo puede aparecer en tales condiciones como un vehículo de presión –y hasta de presión política- sobre los países prestatarios, más que sobre la administración del Banco.” A. RIGO SUREDA: op. cit., p. 644. 306 See www.equator-principles.com
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principles, plus 35 proposed actions in connection to these, voluntarily accepted by
1380 signatories (asset owners, investment managers and service providers), which
control $59 trillion in assets307.
These key steps were applauded by the private sector although the real problem is to put
flesh on the bones of notions such as “social impact”, while controlling the effective
implementation of these objectives. During the 2005 revision of the Equator Principles,
the mention to social impact was legally reoriented to the respect of international
treaties and covenants adopted by States. We are therefore lucky if the State has ratified
the main international human rights treaties (not always the case). Despite obvious
critics concerning their legal value and actual effectiveness, there are two positive
aspects: it introduces “process standards” within corporate behaviour and it increasingly
considers its consistency and cross-fertilisation with internationally recognised human
rights law. In other words, their contribution is mainly “cultural”, “normalising the
consideration of social and environmental factors in corporate decision-making in the
investment sector and, in this sense, it is contributing to the development of
international CSR norms for financiers and investors”308.
Leaving aside the private sector initiatives, globalisation has led to a second problem:
when States make bilateral treaties or conclude contracts, they place themselves under
the obligation to protect foreign investors in front of non-economic risks, and do not
usually include responsibilities for investors as a counter-balance, for example, in terms
of human rights. Bilateralism still dominates the regulation of international investments
at a global level and international organisations might claim more room to make
recommendations309. When an investor, for example, acts against an individual or
collective right within the territory where the investment takes place, the bilateral
agreement does not foresee any kind of sanction to the investor or the possibility of
compensating the victim for the alleged damage. And if the State’s legislation does
307 See www.unpri.org 308 K. MILES: “Soft law instruments in environmental law: models for international investment law?”, in A.K. BJORKLUND and A. REINISCH: International Investment Law and Soft Law, Cheltenham 2012, Edward Elgar Publishing Ltd., pp. 82-108, at pp. 103-105 (on the UNPRI and Equator Principles), and p. 104 (citation). 309 I. GARCÍA RODRÍGUEZ (†): La protección de las inversiones exteriores: los acuerdos de promoción y protección recíproca de inversiones celebrados por España, Valencia 2005, Tirant Ed., pp. 423-424.
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envisage the situation or simply does not apply the legislation and turns a blind eye to
problems, investor’s impunity can be almost absolute.
In contrast, such bilateral texts allow the investor to solve potential controversies with
the State directly through an international commercial arbitration, without exhausting
internal remedies and excluding diplomatic protection. The investment protection
system therefore creates an autonomous regime of States’ responsibility, tendentiously
escaping or outgoing the general norms of international law310. This way, Sates find
themselves involved in important controversies showing the tension between the
necessary protection of investments with its particular regime and the respect for human
rights. This tension usually emerges when dealing with privatisations of basic services
such as drinkable water in developing countries, power supply, and highways
construction, to cite only some of them.
When a bilateral investments’ treaty is applicable, we expect States’ due diligence to
ensure the protection of such foreign investments. Sometimes, it seems difficult to
explain some States initiatives against concrete investors (mainly, nationalisations),
except in clear cases of “general interest” or what is called the “parameters inherent in a
democratic State”.
The problem is that, when determining the applicable law to dispute settlements
between States and investors, the parties do not usually consider the application of
international human rights law, not even States themselves when making investment
contracts. Nor is it done in bilateral treaties when, in the absence of choice by the
parties, the applicable law in a dispute based on a bilateral investment treaty is the law
of the receiving State as well as principles and norms of International Law. Only this
reference to IL, frequently vague and minimal311, could be linked to international human
rights law or, for instance, clarify the obligations of the receiving State.
This is the reason why the first question is the place of general international law within
investment law, before wondering whether there is room for human rights or not. Some
310 J.A. VIVES CHILLIDA: El Centro Internacional de Arreglo de Diferencias Relativas a Inversiones (ICSID), Madrid 1998, McGraw Hill, pp. 1-12. In the Spanish legal doctrine see, in general: A.L. CALVO CARAVACA and L.F. De la GÁNDARA: El arbitraje comercial internacional, Madrid 1989, Tecnos Ed. 311 I. GARCÍA RODRÍGUEZ: op. cit., pp. 405-408.
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arbitration awards show open possibilities to introduce public international law
principles in investment disputes and, indirectly, core human rights principles.
In principle, general international law is never excluded in dispute settlements. The
problem starts with the interpretation of article 42(1) of the ICSID Convention, the first
sentence of which states that “the tribunal shall decide a dispute in accordance with such
rules of law as may be agreed by the parties”, while the second sentence adds that “in
the absence of such agreement, the Tribunal shall apply the law of the Contracting State
party to the dispute (including its rules on the conflict of laws) and such rules of
international law as may be applicable”. Does this mean that general international law is
only applicable in the absence of such a choice of law by the Parties? Or only in cases of
lacunae or contradictions with domestic legislation? Is it then necessary to demonstrate
that the parties have failed to choose the applicable law in order to obtain recourse to
International Law? And in case of choice of law, is it then absolutely necessary to
shame domestic systems and show inconsistencies and lacunae in order to open the way
for public international law? Public international law hasn’t any role outside these strict
requirements? The only possibility to use public international law is the second sentence
of art. 42(1)? Is it otherwise excluded?
When there is a choice of applicable law, the Tribunal has sometimes decided that there
is no reason to ‘go further’ and that a very restricted role of IL may be enough, only for
corrective or supplementary purposes. This is the stance in AUCOVEN vs. Venezuela,
when the contract at stake was easily isolated upholding ‘self-contained regimes’
theories312. It is clear that the tribunal did not feel obliged by the previous and more
liberal award, Wena vs. Egypt, where the ad hoc committee accepted that both domestic
law and international law could be simultaneously applied: “The law of host State can
indeed be applied in conjunction with international law if this is justified. So too
international law can be applied by itself if the appropriate rule is found in this other
312 “The role of international law in the ICSID practice is not entirely clear. It is certainly well settled that international law may fill lacunae when national law lacks of rules on certain issues (so called complementary function). It is also established that it may correct the result of the application of national law when the latter violates international law (corrective function). […] Does the role of international law extend beyond these functions? The recent decision of the ICSID Ad hoc Committee in Wena Hotelts Ltd. Vs. Arab Republic of Egypt accepts the possibility of a broad approach to the role of international law, and that the arbitral tribunal has a “certain margin and power of interpretation”[…] Whatever the extent of international law plays under article 42(2) (second sentence), this Tribunal believes that there is no reason in this case, considering especially that it is a contract and not a treaty arbitration, to go beyond the corrective and supplemental functions of international law”, at ICSID: AUCOVEN vs. Bolivarian Republic of Venezuela, Award of 23 September 2003, Case No. ARB/00/5, para. 102.
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ambit”313. But in Wena, the tribunal had already stated that the parties hadn’t made a
“choice of law under the first sentence of Article 42(1)”314, and this circumstance
facilitated that broad margin of interpretation to include IL.
It seems difficult to understand why the first sentence of article 42(1) would exclude
general international law, when appropriate. It looks like legal juggling the requirement
to place ourselves in the context of the second sentence –art. 42(1), before allowing the
use of international law: nor the first nor the second sentence should, in principle,
exclude international law. In support of this reasoning, the tribunal has clarified that
both international law and domestic law are applicable jointly: “international law is
fully applicable and to classify its role as ‘only’ ‘supplemental and corrective’ seems a
distinction without a difference”315, therefore rejecting a simplistic and reductionist
approach to international law.
Interestingly, in AAPL vs. Sri Lanka, the tribunal made an unprecedented effort of
systematisation of the ICSID case-law: a unique proposal of rules of interpretation,
according to which “ [i] n addition to the ‘integral context’ [of the treaty or contract],
‘object and intent’, ‘spirit’, ‘objectives’, ‘comprehensive construction of the treaty as a
whole’, recourse to the rules and principles of IL has to be considered a necessary factor
providing guidance within the process of treaty interpretation”, and “establishing the
practice followed through comparative law survey of all relevant precedents becomes an
extremely useful tool to provide an authoritative interpretation”316.
In light of this, there are no contracts without law, nor contracts overruling legal
systems: in AAPL, the company maintained that Sri Lanka had failed to protect the
investment since “the Parties [to the BIT] substituted the ‘due diligence’ standard of
general international law by a new obligation creating an obligation to achieve a result
(‘obligation de résultat’), providing the foreign investor a sort of ‘insurance’ against the
risk of having his investment destroyed under whatever circumstances”317. But the
313 ICSID: Wena Hotels Ltd. vs. Arab Republic of Egypt, Annulment Proceeding, Decision of 5 February 2002, Case No. ARB/98/4, para. 40. 314 Ibíd., para. 36. 315 ICSID: Amco vs. Indonesia, Resubmitted Case, Award of 5 June 1990, Case No. ARB/81/1, para. 40. 316 ICSID: AAPL vs. Republic of Sri Lanka, Final Award of 27 June 1990, Case No. ARB/87/3, para. 40 (« rules D and E »). 317 Ibíd., para. 45.
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tribunal finds that applicable law is a “false problem”318 and that a BITs interpretation
that implies a higher exigency of due diligence against Sri Lanka is inconsistent with
general international law, since it disregarded the fact that “rules of international law
have to be taken into consideration by necessary implication, and not be deemed totally
excluded as alleged by the Claimant”319 –here is also the limit of the prevalence of any
lex specialis. So it seems that general international law is not excluded in none of the
two sentences of article 42(1) of the ICSID Convention, provided the situation
sufficiently justifies it.
SPP vs. Egypt constitutes a milestone in the ICSID jurisprudence. First of all, it
confirmed the above considerations on a broader role for International Law, well above
the traditional supplemental and corrective functions. It was ruled that the arbitral
committee can make a reference to International Law and thus change the effects of the
Parties’ choice of law, if necessary. This is the case even when such a choice of law is
clear, in order to avoid a violation of IL by the “exclusive application of municipal
law”320. In effect, nobody can ignore that the autonomous and isolated recourse to the
law designated by the parties as applicable, at end of the day, can be in conflict with
International Law, and not necessarily because internal legislation is ‘incomplete’ or
‘incorrect’, but simply because an isolated application –by itself– can produce unlawful
results.
SPP vs. Egypt is also important because it allows us to address our second question, the
place of human rights. This case concerns the annulment and expropriation of a tourism
investment project following to the discovery of archaeologic remains –it was baptized
“the pyramids case”. The company, Southern Pacific Properties, led a joint venture,
which had already initiated the works by July 1977. After the discovery at the end of
that year, public opposition increased against the project and pushed for a legislative
change to protect cultural rights (art. 15 ICESCR) and, specifically, cultural heritage in
line with the UNESCO Convention for the Protection of the World Cultural and Natural
Heritage, which entered into force in Egypt in December 1975. In 1979, at the initiative
318 Ibíd., para. 24. 319 Ibíd., para. 52. 320 That situation would betray the spirit of the Washington Convention: “When municipal law contains a lacunae, or international law is violated by the exclusive application of municipal law, the Tribunal is bound in accordance with Article 42 of the Washington Convention to apply directly the relevant principles and rules of international law. As explained by one of the author of the Washington Convention […] ”. ICSID: SPP vs. Arab Republic of Egypt, Award on the merits, Case No. ARB/84/3, para. 84.
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of Egypt, the UNESCO Committee was requested to inscribe the Pyramids plateau as
World Heritage Site, implying the maximum protection. According to the arbitral
tribunal, the obligation to compensate an expropriation remains: the expropriation is
considered legal under International Law and “an unquestionable attribute of
sovereignty”321. The obligation to pay an adequate “compensation for a lawful
expropriation” is not the same as a “reparation for an injury caused by an illegal act
such as a breach of contract”322. Of course, the lawfulness of Egypt’s action does not
diminish the expropriatory nature of the measure imposed, and to expect anything else
is just unrealistic. But the role of the UNESCO Convention is also important when
calculating the adequate compensation: first of all, it is precisely limited to a
“compensation” and does not include any “reparation” since it was a lawful
expropriation; and secondly, given that no reparation is foreseen, the arbitral tribunal
decides that the investors are not entitled to any lucrum cessans after the date of the
entry into force of the UNESCO Convention (1979)323 –a by no means negligible
economic saving for the State324.
We must be cautious and realistic: in CDSE vs. Costa Rica, the principle by which any
expropriation is subject to compensation was confirmed, “no matter how laudable and
beneficial to society as a whole […] even for environmental purposes”325 –in that case,
to protect biodiversity. Only in case of unlawfulness of the measure, the investor would
further be entitled to reparations and lucrum cessans. The “international source of the
obligation to protect the environment”326 (we might add, human rights in general) does
not always make a difference: it is also a problem of legal certainty with regard to
guarantee private property and protect foreign investors, so as to promote States’
awareness of their own responsibilities and commitments before concluding contracts
and accepting investments.
321 In other words, a “lawful exercise of the right of eminent domain”, ibíd., para. 158. 322 Ibíd., para. 183. 323 The tribunal “could only award lucrum cessans until 1979, when the obligations resulting from the UNESCO Convention with respect to the Pyramids Plateau became binding on the Respondent. From that date forward, the Claimant’s activities would have been in conflict with the Convention and therefore in violation of international law, and any profits that might have resulted from such activities are consequently non-compensable”. Ibíd., para. 191. 324 For a detailed and systematic study, perhaps more optimistic than us, on the place of cultural heritage in international investment law see: V. VADI: Cultural Heritage in International Investment Law, Cambridge 2014, Cambridge University Press, passim. 325 ICSID: CDSE vs. The Republic of Costa Rica, Final Award of 17 February 2000, Case No. ARB/96/1, para. 72. 326 Ibíd., para. 71.
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Regarding contracts and investments, States must conduct their own studies before
committing themselves to new obligations. In Metalclad vs. Mexico, also touching on
environmental issues but under NAFTA, a company incorporated in the USA had
obtained a Mexican federal authorisation to build an hazardous waste transfer station
and landfill in the valley of La Pedrera (Guadalcazar –Mexico), but the local authorities
refused to issue the final building authorisation for environmental reasons. The arbitral
tribunal logically considers that Metalclad “was led to believe, and did believe, that the
federal and state permits allowed for the construction and operation of the landfill”327
and the company “was merely acting prudently and in the full expectation that the
permit would be granted”328. Again, human rights are not a trumpery excuse for States’
internal administrative chaos and lack of legal certainty.
In sum, our discussion on the place of public international law and, subsidiarily, of
human rights law, in relation to investment law, is not intended to demonstrate that
IHRL and investment protection are “interdependent” –the ICSID already ruled they are
not329, but to show that international investments have to be contextualised and
integrated into general international law as a whole, which is a less audacious approach
with a sounder legal footing.
Indeed, the political discourse under which human rights obligations need to be
prioritised over investment protection constitutes a dialectic trap without fundament in
many cases, used by some States as a shortcut to wash their image and bypass internal
inconsistencies. In our view, this kind of reasoning will probably be unacceptable for an
arbitral tribunal in almost any situation, not even in the case of a developing country.
For example, in Klöckner vs. Cameroon I, the award established that the company had
failed to duly inform the State of the changing economic scenario in 1973, which would
render the industrial investment unprofitable. The corporation therefore breached its
obligation of full disclosure between partners, so the compensation would be limited to
327 ICSID : METALCLAD CORPORATION vs The United Mexican States, Award of 30 August 2000, Case No. ARB(AF)/97/1, para. 85. 328 Ibíd., para. 89. 329 In Borders Timbers Limited et al. vs. The Republic of Zimbabwe, the tribunal was reluctant to the claimants assertion that IHRL has a central role in arbitration proceedings, and the tribunal argumentation proves it is very difficult to provide “evidence” to “support […] that international investment law and international human rights law are interdependent such that any decision of these Arbitral Tribunals which did not consider the content of international human rights norms would be legally incomplete”. ICSID: Borders Timbers Limited et al. vs. The Republic of Zimbabwe, Procedural Order No. 2 of 26 June 2012, Case No. ARB/10/25, para. 58.
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the facilities already built and in use. However, as a commentator points out, the
tribunal took care not to leave the door opened to the ‘right to development’330:
obviously, one can ask if Cameroon wasn’t also able to learn on its own the worsening
of the economic scenario by 1973, if it is enough to be a developing country to allege
that the States’ capacities are reduced (in terms of access to financial advice and
information). However, the award took a rather classic stand: the contractual
relationship between Klöckner and Cameroon apparently implied that the company was
responsible for all the phases of the project, from information and financial
perspectives, to proper works. The failure to disclose all available information to a
partner, including a damnun emergens, was sufficient to demonstrate a lack of “good
faith” on the company’s side, avoiding the debate on Cameroon’s ability to detect on his
own the economic crisis of 1973.
Our “integrationist perspective”331 of investment law within general international law
shouldn’t be understood as challenging the specificity of arbitral rulings, whose centre
will remain commercial matters. Human rights can play a role in investment arbitration,
but States’ powers to protect alleged public interests are not a passe-partout: IL does
not allow States to disregard any of its international obligation; they are “subject to both
international obligations, i.e. human rights and treaty obligations, and must respect both
of them equally”332. With regard to water and sanitation, an ICSID tribunal has clarified
this problem:
« En réalité, les droits de l’homme en général, et le droit à l’eau en particulier, constituent l’une des diverses sources que le Tribunal devra prendre en compte pour résoudre le différend car ces droits sont élevés au sein du système juridique argentin au rang de droits constitutionnels, et, de plus, ils font partie des principes généraux du droit international. […] Mais ces prérogatives sont compatibles avec les droits des investisseurs à recevoir la protection offerte par l’APRI. […] Mais l’exercice de ces pouvoirs ne se fait pas de façon absolue et doit, au contraire, être conjugué avec le respect des droits et des garanties octroyés à l’investisseur étranger en vertu de l’APRI […]
330 E. GAILLARD : La jurisprudence du CIRDI, Paris 2004, Ed. A Pedone, pp. 133-134. 331 R.A. LORZ: “Fragmentation, consolidation and the future relationship between international investment law and general international law”, in F. BAETENS (Ed.): Investment Law within International Law. Integrationist Perspectives, Cambridge 2013, Cambridge University Press, pp. 482-493. 332 ICSID: Suez, Sociedad General de Aguas de Barcelona SA and Vivendi Universal SA vs. The Argentine Republic, Decision on liability of 30 July 2010, Case No. ARB/03/19, para. 262.
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Contrebalancer ces deux principes sera la tâche que le Tribunal devra effectuer lors de son analyse des prétentions substantives […] ».333
In the context of the serious Argentinian debt crisis in 2001 and 2002, which led to a
‘corralito’ (bank freeze), it has been argued that the ‘state of necessity’ (a situation of
economic emergency) justified the State’s failure to satisfy the rights of international
holders of sovereign bonds. This led to a variety of arbitral awards with mixed results
depending on the BIT applicable; in Impregilo, many authors regret that the arbitrators
considered that Argentina itself had contributed to the financial crisis and that there was
no justification to recur to ‘state of necessity’ allegations, on which it is said that too
strict criteria were established334. But one may ask if we really think that Argentina did
not contribute to the worsening of the financial situation –if not to its origin, starting
with inadequate currency policies, like the creation of a new currency (the austral) in
1983, which required new loans and inflated public debt, alarmingly increasing inflation
rates, not to mention widespread corruption. The major lesson learnt from that crisis is
that exception clauses, comprising non-precluded measures (for economic or
whatsoever reasons), could be added to BITs so as to face economic emergencies while
overcoming the unfortunate lack of a treaty or articles adopted on States’ responsibility,
which would have probably clarified the notion of ‘state of necessity’ as in the project
of the ILC.
In any case, it has been said that such exception clauses can be interpreted as a lex
specialis that somehow annuls the stricter requirements of customary international law
to effectively put forward a state of necessity335; however, we think this consists of
playing the game of those interested in the fragmentation of IL. The real lex specialis is
the bilateral treaty and not a clause within it. It would be wiser to argue that such an
exception clause is, as its very name indicates, an exception to the BIT, which is the real
lex specialis. In this way, the proper lex specialis –the BIT, incorporates an exception
clause aimed at reintroducing general international law into the BIT (like the state of
necessity). If human rights clauses or general exception clauses are added to new 333 ICSID: SAUR International S.A. vs. Argentine Republic, Decision on Jurisdiction and Liability of 6 June 2012, Case No. ARB/04/4, para. 330-332 (original versions only in French and Spanish). 334 See, for example: I. IRURETAGOIENA AGIRREZABALAGA: “Protección de inversor extranjero versus salvaguardia de intereses esenciales del estado en contextos de crisis económica, financiera y social”, in F.J. QUEL LÓPEZ and M.D. BOLLO AROCENA: Intereses públicos, intereses privados, su defensa y colisión en el Derecho Internacional, pp. 63-97, at pp. 94-95. Also refer to the bibliography therein. 335 This would only be so if the clause specifies those (looser) requirements of the state of necessity, which is unlikely to happen given the usually vague language of BITs. Ibíd., p. 93.
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generation BITs, it is not to play the game of fragmentation and allege their character of
lex specialis to ensure their primacy; on the contrary, it is to reflect the relational
character of IL and that investment treaties operate within a wider legal context that
may include human rights or the state of necessity. Legal doctrine has to adequately
interpret those clauses as an open window for general international law and a way to
effectively consider the relational character between competing regimes under IL (like
investment protection and human rights). Such clauses should not be read in terms of a
lex specialis within the lex specialis. Such clauses can precise and clarify some
customary practices in the subject of ‘state of necessity’ –given that there is room for
clarification since the General Assembly did not adopt the ILC draft articles on the
responsibility of States. In this sense, States further have the opportunity, through those
clauses, to specify and detail –to their liking– a consuetudine, without further
contributing to the so-called ‘self-contained regimes’. In this sense, a spread practice
that includes those clauses on human rights and state of necessity can be beneficial in
the long term, provided we understand them in line with the relational character of IL.
In any of the previous situations, the compatibility between IHRL and investment
protection will naturally depend on the availability of an “alternative that is […] least
inconsistent”336 with the BIT, MIA or Contract at stake. A different approach to the
dialectic between investments and human rights will be likely to fail, as well as the
misuse of human rights to hide legal uncertainty or to withdraw ex post risky
investments not duly evaluated in advance. These considerations are essential to assess
if “measures are proportional to the public interest presumably protected thereby and to
the protection legally granted to investments” 337, as noted in an interesting case where
the arbitral tribunal directly cites the ECHR to build this concept of proportionality.
336 In a case brought to UNCITRAL arbitration under NAFTA, the Committee reached that conclusion when considering the compatibility between the Basel Convention and NAFTA: “Even if the Basel Convention were to have been ratified by the NAFTA Parties, it should not be presumed that Canada would have been able to use it to justify the breach of a specific NAFTA provision because… where a party has a choice among equally effective and reasonably available alternatives for complying… with a Basel Convention obligations, it is obliged to choose the alternative that is… least inconsistent… with the NAFTA. If one such alternative were to involve no inconsistency with the Basel Convention, clealy this should be followed” (emphasis in the original). UNCITRAL: S.D. MYERS Inc. vs. Government of Canada, Partial Award of 13 November 2000, para. 215. 337 Again under the NAFTA: ICSID: Técnicas Medioambientales Tecmed SA vs. Mexico, Award of 29 May 2003, Case No. ARB(AF)/00/2, para. 122. (Original in Spanish, available at www.icsid.worldbank.org).
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Yet States do not always win these cases –sometimes because the arbitral tribunal finds
their human rights allegations abusive or elusive of other international obligations, the
open possibilities shouldn’t be neglected. All these cases constitute an important
improvement in the overall because the evolution shows an increasing openness. States
will have to make a genuine effort to duly prove their human rights allegations, the
proportionality of the measures adopted, the compatibility with investment protection,
as required by the above cited jurisprudence. Certainly, it is still not clear to what extent
an arbitral tribunal –such as the ICSID– might put into practice this linkage: at first
sight, investment headquarters don’t seem the place to protect human rights. It doesn’t
look as if it was a competency of those tribunals. Furthermore, arbitrators are commonly
selected amongst lawyers and litigators with sufficient practice in international
commercial law, and logically not in public international law. The growing number of
ICJ judges that also act as arbitrators (not being incompatible), may change the
historical lack of public international law perspectives within investment disputes.
However, it is interesting to note that there is nothing stopping one of the parties from
proposing a human rights expert as an arbitrator, at least in some cases, obviously
jointly with commercial lawyers in the arbitral tribunal. Nevertheless, the language of
investment contracts usually lacks of this level of concreteness and specificity.
From a pragmatic approach, a high specialisation in international commercial law is
perfectly understandable; the easiest desirable solution could be double: a) to provide
arbitrators with a human rights perspective that might complete their assessment of the
facts; b) to make sure that the contract includes at least one general reference to
“general international law and other international obligations of the State” in line with
the usually vague language of these contracts. Historically speaking, international
investment law was born to protect investors, who traditionally were the main
beneficiaries of arbitration; this has changed and States’ legitimate interests are now
“protected” in more and more cases338 and some general interests have found a place,
even anti-corruption339.
338 « Plus généralement, on a pu assister, au cours des dernières années, à une évolution sensible des rôles, les États n’étant plus systématiquement défendeurs, si ce n’est défaillants, et les principes tel que le respect des conventions ou l’exécution de bonne foi des conventions n’étant plus systématiquement invoqués par les seuls investisseurs. » E. GAILLARD : op. cit., p. 213. 339 In Wena vs. Egypt, the arbitral tribunal accepted that corruption could justify the annulment of a contract: “The first concerns the validity of the leases in connection with an alleged incident of corruption or conflict of interest […] While such improper influence can invalidate the lease agreements under Egyptian law, or for the matter of corruption also under international law, such unlawful act has to be
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We don’t forget either that arbitrations are conducted in closed sessions, making it
difficult to know the comparative importance given to human rights or non-investment
issues, and their final weight, except when the arbitral award is explicit and public. It is
true that an increasing number of decisions are made public and transparency is wider,
since Metalclad vs. Mexico (cited above), the first time an amicus curiae submission
was accepted, which is a consolidated practice by now340. Acting more boldly, but less
realistically, we could also think of including specific human rights clauses in bilateral
investment treaties or some kind of reference to the protection of human rights and its
levels of obligations, both for States and investors.
Investment contracts could eventually be revised in order to include a clause by virtue
of which the investors accept the obligation to respect international human rights law.
However, as we have said above, this is an unlikely event: companies pressure States
affirming that specific human rights legislation could decrease the economic growth and
the benefits expected from the project. If a State assumes this reasoning, it should be
considered to constitute a breach of its responsibility with regards to human rights. To
sum up, under the light of public international law, an investment contract should be
interpreted in a way that a State action to protect human rights cannot be considered
contrary to any investment contract, or impeding its development, and of course would
not constitute a reason for the termination of the contract. This does not mean that
investors will be left unprotected: we have seen that the open windows for human rights
protection do not challenge the essential principles of investment law. Depending on the
strength of the public goals pursued by the State, the amount of eventual compensations
might vary; and reparations might be excluded, only if States act more responsibly
when juggling with their diverse international obligations and their internal problems.
Conclusion
There are signs of hope but the work is still incomplete to ensure respect for human
rights with reference to international investments. Transparency on the content and
scope of the projects being financed is absolutely crucial, as well as the content of
proved”. ICSID: Wena Hotels Ltd. vs. Arab Republic of Egypt, Annulment Proceeding, Decision of 5 February 2002, Case No. ARB/98/4, para. 47. 340 E. GAILLARD: op. cit., pp. 618-619.
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investment contracts and international agreements –of course, without disseminating
confidential issues that can be important for private companies in front of their
competitors.
All in all, human rights mainstreaming is an idealistic strategy to include HR within the
contractual framework and, even before, during its negotiation. The solution can be both
pragmatic and holistic:
-reinforce multilateralism and the role of IOs to offset the negative effects of a
mainly bilateral or simply contractual system of regulating international investments341.
Multilateral fora are more likely to promote consistency at an international level, by
avoiding undue legal fragmentation, fostering policy transfers and proposing model
BITs and MIA together with additional interpretative instruments able to consolidate an
opinio iuris in favour of consolidating the human rights’ transversality.
-means of dispute settlement can be provided with a human rights-based
approach when necessary, which is not a threat to the central place of international
commercial law, but taking into account that States have concurring international
obligations;
-general exceptions clauses could be put in place in model BITs, MIAs or
contracts. Bearing in mind the tendency to vagueness or ambiguity in these instruments,
a general mention to ‘international law principles and other international obligations’
could be enough to open some windows, read in conjunction with the Vienna
Convention on the Law of Treaties. More specific formulas directly mentioning human
rights might be studied (human rights clauses). The spread inclusion of such clauses can
have customary effects in the long run and solve the problem of allegedly self-contained
regimes.
-in connection to this, further clarification could be made as for the role of
general international law, which has been used so far to solve contradictions between IL
and domestic law, or to complete the latter when necessary. The use of general
international law could be extended to include core internationally recognised human
rights principles if necessary. The practice in this regard shows some open windows to
be further developed. 341 Meg Kinnear, Secretary-General of the ICSID, already detects that “[p] erhaps the most significant recent trend is the shift from negotiating bilateral treaties to negotiating treaties on a regional basis”. M. KINNEAR: “Navigating International Dispute Resolution: Innovation in Investor-State Arbitration”, in Hugo Grotius Conferences –Universidad San Pablo CEU, Madrid 2013, Ed. Fundación Universidad San Pablo CEU, 33 pp., at pp. 17-18.
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-it could finally be envisaged to require that potential concessionary companies
(or consortium of companies) have CSR measures and codes of conduct, extended to
subcontractors. In parallel, it has to be studied to what extent the existence of codes of
conduct, made public and approved at the senior level of TNCs, can have a “contractual
value” in the context of a dispute. At least, such a development may not be discarded ad
futuram, if the international practice continues in the same direction342.
Many States are developing Corporate Social Responsibility Guidelines and NAPs,
conscious that a soft law instrument can contribute to the improvement of their respect
for human rights, in the understanding that human rights are a transversal interest within
the international society and, if a hard law perspective is finally needed, it should be
made available and mainstreamed within the means of dispute settlement without
challenging the specificities and central place of commercial matters. More importantly,
a current trend shows that more and more States include general non-investment clauses
in BITs and MIA: an early precedent is the Netherlands-Costa Rica BIT (1999)
expressly “including its laws and regulation on labour and environment”, or even in the
multilateral Common Market for Eastern and Southern Africa, investments might be
subject to environmental and social impact assessments343. The spread of these “new
generation BITs”344 would support the consolidation of an international practice in this
regard and building a wider consensus in the long run. Individuals have the rights to
claim against the investing company and access to justice has to be guaranteed, up to
the exhaustion of domestic remedies (with the well-known exceptions of unreasonable
delays, ineffective or unavailable appeals). Otherwise the equality before the law is
seriously undermined and non-discrimination is a general principle that, whether or not
342 On the eventual contractual relevance of codes of conduct see: C. CRONSTEDT: “Some Legal Dimensions of Corporate Codes of Conduct”, in R. MULLERAT: op. cit., pp. 443-460, at pp. 452-455. Being a problem of civil law, it falls beyond the scope of this research. 343 A comment of both precedents at: C. TIETJE and E. SIPIORSKI: “The evolution of investment protection based on public international law treaties: lessons to be learned”, in A.K. BJORKLUND and A. REINISCH (Eds.): op. cit., pp. 192-237, at pp. 233-235. 344 However, these precedents are still far from widespread. Prof. Attila Tanzi provides some additional examples and precedents in the above-cited case-book, such as the Hungary-Russian Federation BIT (1996, art. 2 referred to “protection of the environment, morality and public health”), US-Uruguay BIT (2006, in which the Preamble states that it must be read “consistent[ly] with the protection of health, safety, and the environment and the promotion of consumer protection and internationally recognised labour rights”, as well as art. 12 specifically on the environment), the US Model BIT (Preamble and article 12), article 1114 of NAFTA on the environment, the Japan-Philippines Economic Partnership Agreement Helsinki (2008, in which art. 99 protect “human, animal or plant life or health” –very similarly to WTO exception clauses in GATT agreement, see following section). A. TANZI and F. CRISTANI (Eds.): International Investment Law and Arbitration. An Introductory Casebook, Milano 2013, CEDAM Ed., pp. 319-321.
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a State has ratified a particular treaty, is considered customary international law. No
investment contract may operate outside this frame even though the success or failure of
developing these niches of opportunity (for human rights within investment law) will
depend on the States’ good faith when it comes to put it into practice.
2.2.2 Screening the WTO: open windows
The approach to this subject is recurrently passionate: if it is true that trade is about
business and business is about competition and private benefits, we need to
acknowledge that it makes sense to promote a trade culture that respects consumers’
rights to the extent trade doesn’t happen without consumers. As investment contracts
are not, by themselves, ontologically opposed to human rights, multilateral trade
agreements aren’t necessarily a threat to consumers’ rights. We face, of course, a
number of conflicting interests: States, TNCs, lobbies, media, NGO’s and CSO’s,
individuals and international organisations. There are, also, shared responsibilities. This
said, we would falsify the debate if we shift responsibility only towards consumers: it
would be impossible for every single consumer to ethically evaluate every product he or
she buys before purchasing it. Responsibility is also sitting on the rest of actors.
WTO’s institutional role in context
Trade has suffered substantial changes in the second half of the twentieth century,
starting with the rising exchange of intermediate goods instead of final products.
Commercial services grow faster and are the biggest part of international trade in a
context of constant decline of communication and transportation costs. A more recent
change is the growing importance of services –the enablers of global value chains.
Comparative advantages are in intermediate goods and not anymore in final products so
that countries can specialise in tasks within the framework of a more and more
knowledge-based economy345. In fact, the so-called global value chains are not chains
345 The following pages of this manual will provide a good explanation of the types of intra-industrial and inter-industrial specialisation, changing current comparative advantages in relation to global value chains, at: M. CARRERA TROYANO, D. de DIEGO ÁLVAREZ and R. HERNÁNDEZ MARTÍN: “Lección 8. Comercio internacional” in J.A. ALONSO (Dir.): Lecciones sobre Economía Mundial. Introducción al
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anymore, but networks, generally dominated by three regions (North America, Asia and
Europe).
A good example is the study made by Rivoli346, who has tracked the supply chain of a
simple t-shirt, from the cotton grown in Texas, to its manufacture in Shangai, its
printing back to the US (logos), and finally placed in the international markets, even
sent to Tanzania shredded as furniture padding. We are witness to a highly fragmented
production system where supply chains are obscure for most of the consumers; there is
almost no person who knows all steps of a product. Decisions are, in turn, distributed in
this global network. Another challenge in the internet era is data protection and the
acceleration of exchanges, where legislation is still slow to meet consumers’ problems.
On the other side, we find difficulties for small and medium producers/traders to reach
international routes. We also find a number of legal gaps despite the intense
international transactions. A recurrent cause of disagreement we should keep in mind is
the continued subsidies in OECD countries, especially in the agricultural sector. And
finally, we tend to obviate that trade is an easy victim of other political tensions, which
are immediately reflected in multilateral fora347.
Beyond the directly related human rights issues of international trade348, we can also ask
ourselves a more general question: is there a clear link between globalisation and
income inequality? Do we find a substantial relationship of cause and effect between
trade liberalisation and unemployment, especially during the current economic crisis?
Of course, we cannot give a definitive and rigorous response as far as the economists
don’t agree in this respect. Up to a certain point, economic openness promoted by the
WTO can increase income inequality to the extent networks and conditions need to be
developed to participate in and benefit from global markets. On-going adjustments are
more or less painful, even in the OECD countries, depending on their level of previous
preparation to markets instability through consistent and proficient public policies.
Desarrollo y a las relaciones económicas internacionales, Madrid 2013, Ed. Civitas, pp. 239-270, at pp. 252-260. 346 P. RIVOLI: The Traves of a T-Shirt in the Global Economy. An Economist Examines the Markets, Power and Politics of World Trade, Hoboken-New Jersey 2009, John Wiley & Sons Inc., passim. 347 An insight on the current challenges of trade: P. LOVE and R. LATTIMORE: International Trade: Free, Fair and Open?, Paris 2009, OECD Insights. 348 A comprehensive summary: OHCHR: Les droits de l’homme et les accords commerciaux internationaux. Utilisation des clauses d’exception générale pour la protection des droits de l’homme, New-York-Geneva 2005, Nations Unies.
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It goes without saying that trade liberalisation has a potential for growth and
development but is insufficient to make widely available the benefits from global value
chains: “[n] ot all countries, firms and workers are equally prepared for the adjustments
associated with more integrated markets”349. There are always particularities that make
different the situation from a country to another; nevertheless, it is strongly advisable to
maintain a sustained investment in education, skills and training, combined with social
protection systems (regardless of the chosen formula) and comprehensive labour
policies. These policies soften the adjustments to markets volatility and make it easier to
prepare the country’s workforce to changing supply-demand dynamics.
A nuanced discussion would recognize the possibilities of trade to generate growth and
development, but would point out that the benefits of increasing trade are unequally
distributed so that complementary policies are needed to accompany trade liberalisation
towards a more equitable international order. Sustainable development means,
primarily, a sustainable and respectful use of resources, not an idealistic renunciation to
use them. Consumers’ education and awareness has to be fostered, together with
capacity building initiatives in the developing countries to tackle corrupted regimes and
expand democracy and the rule of law. We lack of a holistic approach in which trade
facilitation of goods and services is oriented to make benefits accessible to the poorest
regions and people350.
When international organisations are accused of ineffectiveness and helplessness, then
again it reflects the situation of the member States as member-driven organisations.
First of all, State representatives usually have a very slight margin of negotiation when
plenary debates take place (red lines are tight). Secondly, the home countries’ situation
holds back many possible improvements, because of the multiple political and legal
systems and, in many occasions, due to lacks of good governance. Finally, even in the
best case scenario, we come across uncertain domestic determinants (from elections to a
wide range of political imponderables). In sum, a basic mismatch persists: trade is not
sufficiently mainstreamed in development strategies and, at the same time, human rights
349 OECD, WTO and WORLD BANK GROUP: Global Value Chains: Challenges, Opportunities and Implications for Policy, Report prepared for submission to the G-20 Trade Ministers Meeting, Sydney-Australia (19th July 2014), p. 9. 350 K. J. GUEST: “Exploitation Under Erasure: Economic, Social and Cultural Rights Engage Economic Globalisation, in Adelaide Law Review, 19 (1997), pp. 73-93, at pp. 79-84.
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aren’t adequately mainstreamed in trade policies. Simultaneously, the work of different
international organisations still lacks of coordination.
From an institutional perspective351, the WTO replaces GATT 1947, as the result of the
Uruguay Round (1986), culminating in the Marrakesh Agreement (1994), which entered
into force in 1995. Biannual ministerial conferences or rounds mark the agenda and
conclude binding subsequent agreements352, added to the diverse treaties on specific
trade issues. The main purpose of the organisation remains trade liberalisation through
the elimination of trade barriers, i.e., against trade tariffs and all forms of protectionism
and discrimination of products. With over 162 member-States (Afghanistan will be the
163rd member by June 2016), and 34 members considered Least Developed Countries
(LDCs), the WTO is no longer a club of developed and like-minded States, but has
evolved into a strongly multilateral forum. Perhaps the other side of the coin is the
lengthier process of negotiations and less outcomes from trade talks and rounds.
With its pros and cons, the institutional role has to be analysed in light of a prominent
particularity of the WTO compared to other international economic organisations: the
WTO is the only international economic organisation that follows the system one
member – one vote, more typical of IOs of political character. For instance, we shall
further note that WTO membership necessarily implies accepting its jurisdictional
organs and their decisions, with a unique force among international organisations (the
Dispute Settlement Body –DSB). No member of the WTO can opt-out of this settlement
mechanism. In more general terms, and despite its relatively reduced administrative
structure in Geneva (Switzerland), we can distinguish four functions of the WTO, all of
them highlighting the solidity of its institutional role353: an executive function (the
application of the Marrakesh Agreement and subsequent trade agreements), a
jurisdictional function (the administration of the DSB), a legislative function (creates
351 A concise appraisal on the most significant traits of the WTO at: L. GRADONI: “L’organizzazione mondiale del Commercio”, in L.S. ROSSI (a cura di): Le Organizzazioni Internazionali come Strumenti di Governo Multilaterale, Milano 2006, Giuffrè Ed., pp. 313-362. 352 Article IV of the Marrakesh Agreement Establishing the WTO states: “There shall be a Ministerial Conference composed of representatives of all the Members, which shall meet at least once every two years. The Ministerial Conference shall carry out the functions of the WTO and take actions necessary to this effect. The Ministerial Conference shall have the authority to take decisions on all matters under any of the Multilateral Trade Agreements, if so requested by a Member, in accordance with the specific requirements for decision-making in this Agreement and in the relevant Multilateral Trade Agreement”. 353 These four functions and their institutional importance could be explained in terms of implicit powers, as noted by: E. LÓPEZ BARRERO: Regulación del comercio internacional: la OMC, Valencia 2010, Tirant lo Blanch Ed., pp. 194-195.
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the institutional framework and become the forum for consecutive binding agreements
and decisions through Ministerial Rounds or the General Council’s regular meetings),
and finally, a function of participation in international relations (coordinating itself with
the IMF, WB, WHO, ILO, when appropriate, in economic and developmental issues).
Strength and flexibility equally characterise the WTO’s institutional building, the first
because of its capacity to produce major legislative changes on global trade rules, and
the second because, at the same time, it shows an undeniable capacity to adapt itself to
changing scenarios, starting with its re-founding in 1994. The increase of amicus curiae
submissions to Panels and the AB is another example of flexibility or, if we insist in
talking in negative terms, maybe an “acrobatic”354, but useful interpretation of the
Dispute Settlement Understanding (art. 13). In the pursuit of transparency and public
participation, an annual forum is organised in Geneva’s headquarters, where a good
amount of NGOs’ and CSOs’ representatives can raise their voice, though with mixed
results. In the course of 2014 Annual Forum355, a disenchanted Argentinian trade-
unionist ironically described the “cathartic effect” of a 10 hours flight to Switzerland to
raise his voice in front of “circumspect” WTO officers that will gently listen to his
complaints and regrets, on the lack of further agreements after Doha and on the
continuation of more SME-inclusive initiatives. A better trade system may be imagined,
but the fact is also that CSOs’ and NGOs’ representatives continue to attend those
meetings, which originally constituted an institutional improvement.
An additional example of evolution and institutional flexibility is the way development
has reached an unexpected place in international trade rules and debates. The
relationship between development and human rights, and their compatibility with the
WTO founding purposes, has caused an endless debate with a good amount of wishful
thinking, especially after the Doha Round introduced the so-called ‘development
mandate’ into the WTO356. The importance of Doha’s Ministerial Declaration lies in the
explicit pro-developing countries language, emphasizing that “no country should be
354 F. WEISS: “Good Governance in the Procedural Practice of the WTO”, in A. LIGUSTRO and G. SACERDOTI (a cura di): op. cit., pp. 479-493, at p. 491. 355 We wish to thank Mr. Josep Bosh, WTO officer, for his kind invitation and logistic help to attend 2014 Annual Forum. 356 Among the over-abundant literature on the Doha Round and its allegedly profound change of WTO, we shall propose a recent state of the art and the bibliography therein: D.A. GANTZ: Liberalizing International Trade after Doha. Multilateral, Plurilateral, Regional and Unilateral Initiatives, Cambridge 2013, Cambridge University Press, passim.
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prevented from taking measures for the protection of human, animal or plant life or
health, or the environment at the levels it considers appropriate”357, provided they are
made consistently with WTO agreements and they do not disguise protectionist
measures. This stronger developmental approach was later confirmed in Hong Kong
(2005) and, ever since, the organisation’s work entails a more sensitive approach to
non-trade-related issues, expressly encouraging coordination with other international
organisations to undertake capacity-building and technical assistance in development
issues. In short, the WTO’s developmental vocation at an institutional level was not
born at Doha, despite the profuse literature in this line; it could be said that it was
reinforced in 2001, but one should recall –under GATT 1947– the Enabling Clause of
1979, according to which preferential treatment could be granted to developing
countries, temporarily annulling MFN obligations, in so far as they are generalised, non-
reciprocal and non-discriminatory358. Development was, therefore, latent in the WTO’s
institutional practice well before Doha, without denying the moderate importance of
2001 Round.
Major changes have been adopted at the latest Ministerial Conference in Nairobi (15-19
December 2015), including quite significant progresses in the elimination of agricultural
subsidies. As of January 2016, developed countries immediately commit to end
subsidies on farm products; developing countries359 will do so by 2018 with a flexibility
calendar until 2023 to cover transport costs and marketing difficulties; and least
developed countries, until 2030. The financial crisis since 2008 has generated instability
in the stock markets, affecting commodities and primary products –a tragic example is
the rise of the price of corn. At the same time and paradoxically, depending on the
markets fluctuations, imports of primary products (or even food aid) from developed
and developing countries into LDCs notably increases the supply in LDCs, imbalances
their internal market and dramatically reduces the prices for local producers, creating at
the end similar problems. With food security under threat, many LDCs and some
357 It must be noted that the language follows very closely that of article XX GATT (“the protection of human, animal or plant life or health”), WTO (Doha Ministerial Conference): Ministerial Declaration, Adopted on 14 November 2001, WTO Doc. WT/MIN(01)/DEC/1, para. 6. Please, note that all official WTO documents, dispute cases and treaties cited in this section are available at www.wto.org. 358 This led to the spread of “Generalised Systems of Preferences” (GSPs). GATT: Decision on Differential and More Favourable Treatment, Reciprocity and Fuller Participation of Developing Countries, 28 November 1979, GATT Document L/4903, mainly par. 3 c), 4, 5 and 8. 359 For economy of language in this section, we only refer to ‘developing countries’, which are also members of the WTO, as with ‘LDCs’ or ‘developed countries’.
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developing countries put in place public stockholding programmes (for cases of sudden
rise in prices) and tariffs (for eventual rapid import surges) to address both
problematics. Already established in Doha Round and confirmed in 2005 in Hong
Kong, a Special Safeguard Mechanism was a tool to face suddenly increasing imports,
to provide “the flexibility to self-designate an appropriate number of tariff lines as
Special Products guided by indicators based on the criteria of food security, livelihood
security and rural development”, and “based on import quantity and price triggers”360.
For the moment, Nairobi’s package does not provide a definitive solution in this regard,
but provisionally allows Public Stockholding for Food Security Purposes, as well as the
extension of the Special Safeguard Mechanism while negotiations continue, that means
at least until the next negotiation round in 2017. Finally, there are very concrete
successes for LDCs, mainly sub-Saharan African countries: the ministerial conference
approved preferential rules of origin to determine when a product is ‘made in an LDC’ –
products can use foreign materials provided they constitute less than 75% of the final
value of the product; also from 1 January 2016, cotton from LDCs will have quota-free
and duty-free access to the markets of developed countries and those of developing
countries willing to do so, while it foresees the immediate prohibition of cotton
subsidies in developed countries and the progressive prohibition in developing ones. A
different Ministerial Decisions extended the waiver on MFN obligations under the
GATS to allow preferential treatment to LDC services and service suppliers for an
additional period of 15 years (until 2030), with a view to address the historic delay of
these countries in trade in services.
It is early to know if Nairobi is a turning point, or even the “death of Doha”361 and a
shift towards a more pragmatic, consensus-based and item-by-item approach so as to
ensure delivering results. The link between trade and development might receive a new
long-term impulse because of 2008 crisis362. There was an undeniable need to unblock
the remaining issues of Doha’s Work Program and to reinforce or revitalise the global
360 WTO (Hong Kong Ministerial Conference): Ministerial Declaration, Doha Work Programme, Adopted on 18 December 2005, Hong Kong, WTO Doc. WT/MIN(05)/DEC, para. 7. 361 S. DONNAN: “Trade talks lead to ‘death of Doha and birth of new WTO”, in Financial Times, 20 December 2015, accessed online at: http://www.ft.com/cms/s/0/97e8525e-a740-11e5-9700-2b669a5aeb83.html#axzz3vdqE8qHB. 362 R. BERMEJO GARCÍA and R. GARCIANDÍA GARMENDIA: “La crisis financiera internacional y sus consecuencias sobre el sistema comercial multilateral de la Organización Mundial del Comercio”, in D.J. LIÑÁN NOGUERAS (Dir.) and A. SEGURA SERRANO (Coord.): Las crisis políticas y económicas: nuevos escenarios internacionales, Madrid 2014, Tecnos Ed., pp. 105-128, at pp. 123-127.
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institutional role of the WTO, moreover taking into consideration the spread of regional
trade arrangements outside the WTO and, very prominently, the US initiatives with the
Trans-Pacific Partnership and the parallel Trans-Atlantic Trade and Investment
Partnership with the EU (still in negotiation). Regardless of future changes, it can be
concluded that this institutional profile facilitates the WTO substantive contribution,
though some natural limitations remain.
WTO’s substantive contribution
On the substance, there are numerous human rights’ aspects of international trade and
there are open possibilities to introduce non-trade-related issues into the WTO practice.
Similarly to what has been argued with regard to development and its origins well
before the Doha Round, the “GATT-WTO legal regime already harbors a number of
putatively human rights-based principles”363, as noted by Prof. David Kinley referring
to non-discrimination between trading nations, the inclusion of intellectual property
rights after TRIPS Agreement, and the significant precedent of article XX of GATT
1947 as an exception clause.
Precisely article XX of GATT has inspired the rest of general exception clauses in the
following multilateral trade agreements, in order to allow measures “necessary to
protect public morals”, “necessary to protect human, animal or plant life or health”,
“relating to the products of prison labour”, or “imposed for the protection of national
treasures of artistic, historic or archaeological value”. Article XIV of GATS foresees,
mutatis mutandis, the same exceptions, to which it adds “the privacy of individuals” and
“safety”. Article XXIII of the Public Procurement Agreement includes in its first
paragraph an exception for national security reasons and, in the second comma, the
general exception clause according to which “nothing in this Agreement shall be
construed to prevent any Party from imposing or enforcing measures: necessary to
protect public morals, order or safety, human, animal or plan life or health or
intellectual property, or relating to the products or services of handicapped persons, of
philanthropic institutions o of prison labour”. Article 27(2) of TRIPS assumes that, if
“necessary to protect ordre public or morality, including to protect human, animal or 363 D. KINLEY: “Corporate Social Responsibility and International Human Rights Law”, in R. MULLERAT (Ed.): op. cit., pp. 231-241, at p. 235.
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plan life or health or to avoid serious prejudice to the environment”, inventions may be
excluded from patentability. TRIPS Agreement also establishes that intellectual
protection “may be waived by a Member in the case of a national emergency or other
circumstances of extreme urgency or in cases of public non-commercial use” even
though in these situations “the right holder shall […] be notified as soon as reasonably
practicable”. Article 2(2) of the TBT Agreement further recognises “legitimate
objectives” in a broad manner since it makes a non-exhaustive list: “Such legitimate
objectives are, inter alia: national security requirements; the prevention of deceptive
practices; protection of human health or safety, animal or plant life or health, or the
environment”. Finally, article 2(2) of the SPS Agreement limits sanitary and
phytosanitary measures to “the extent necessary to protect human, animal or plant life or
health” and “based on scientific principles, and is not maintained without sufficient
scientific evidence”, obviously complicating our debate.
Compared to investment treaties and contracts, the language of WTO Agreements
suggests, at first sight, a more embracive relationship between trade regulation and non-
economic concerns, but this optimism has to be balanced with the organisation’s
practice in the field. Continuing similarly to investment cases, we shall first assess the
linkage to general international law and, in a second stage, examine those “open
windows” for human rights. Besides these latent human rights aspects in the exception
clauses cited above, it is the Dispute Settlement Body (DSB) who has opened those
windows, sometimes in the form of a panel’s report and, in other occasions, the
Appellate Body (AB), which is the last instance in the dispute settlement procedure as
foreseen by the Dispute Settlement Understanding (DSU).
For instance, many disputes support our integrationist approach, against the
fragmentation of International Law through allegedly autonomous self-contained
regimes, so we may only mention a few famous cases chosen for their expressiveness.
The Appellate Body (AB) promptly clarified that the General Agreement “is not to be
read in clinical isolation from public international law” and directly cited the Vienna
Convention on the Law of Treaties364, when interpreting the scope of article XX GATT
(commas b) and g)). From the perspective on general international law, the AB has
further expressed that its work has to be “faithful to the ‘customary rules of
364 WTO (AB): United States – Standards for Reformulated and Conventional Gasoline, Report of the Appellate Body, 29 April 1996, WTO Doc. WT/DS2/AB/R, p. 17.
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interpretation of public international law’”, and very eloquently added: “WTO rules are
not so rigid or so inflexible as not to leave room for reasoned judgements in confronting
the endless and ever-changing ebb and flow of real facts in real cases in the real
world”365, thus sustaining an evolving and progressive development of International
Law, closer to the material reality366. In the same vein, the AB has aligned itself with
the “contemporary concerns of the community of nations about the protection and
conservation of the environment”, implicitly recognising that there are common
interests of the international society, such as “sustainable development”, as included in
the preamble of GATT 1994. Moreover, it has adopted a progressive approach to
evaluate the meaning of ‘natural resources’ in art. XX(g) GATT, a term that “is not
‘static’ in its content or reference but is rather ‘by definition, evolutionary’”367. WTO
Agreement should not be interpreted literally, but finalistically in accordance with the
preamble of WTO Agreement, which “gives colour, texture and shading to the rights
and obligations”368.
Bearing in mind this framework, recourse to exception clauses and public international
law is obviously not unconditional. The first paragraph of article XX GATT details the
chapeau under which it can be used. In sum, the reasoning has two steps: the measures
at the origin of the dispute must fall within the scope of the exception clauses; and
secondly, it must also be demonstrated that they are consistent with the chapeau to
avoid a misuse or abuse of article XX GATT.
It is worth citing two precedents under GATT 1947. In Thailand-Cigarettes the Panel
used this test on equivalent domestic measures to prove that Thailand’s prohibition of
American cigarettes disguised a protectionist initiative to benefit local production. The
test must assess that measures are “necessary” to protect a public interest enshrined in
art. XX GATT, i.e., “only if there were no alternative measure consistent with the
General Agreement, or less inconsistent with it”, and “provided they do not thereby
accord treatment to imported products less favourable than that accorded to ‘like’
365 WTO (AB): Japan – Taxes on Alcoholic Beverages, Report of the Appellate Body, 4 October 1996, WTO Doc. WT/DS11/AB/R, p. 31. 366 This coincides entirely with our methodological approach, as explained in the introduction. 367 WTO (AB): United States – Import Prohibition of certain Shrimps and Shrimp Products, Report of the Appellate Body, 12 October 1998, WTO Doc. WT/DS58/AB/R, para. 129 and 130 (quotes). 368 Ibíd., para. 155.
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products of national origin”369. Thailand-Cigarettes case was also a landmark because
of the important submission by the WHO, an example of coordination between
international organisations. Also under GATT 1947, in a case between the US and
Canada on the protection of tuna in line with the International Convention on the
Conservation of Atlantic Tuna, the Panel decided to adopt, without consequences, its
report despite the previous amicable conciliation between the parties outside the
DSB370. The Panel observed that trade exceptions based on environmental concerns are
not allegeable to hide other interests –in that case, the US non-recognition of Canadian
sovereignty over tuna in its Atlantic coastal waters, initiating the WTO dispute when
Canada seized US-flagged fishing vessels371.
After 1995, the WTO has continued this practice while further detailing the exact
conditions laid down by the chapeau of art. XX GATT. In US-Gasoline, the AB stated
that the import restrictions had no equivalent internal measures in the US; therefore,
though clean air may fall within the scope of art. XX, the US failed to demonstrate that
the measure adopted was consistent with equivalent measures at a domestic level, and
the AB concluded that the US put forward biased environmental purposes to actually
grant privileges to internal producers of gasoline372. When dealing with Japan’s higher
taxes for foreign alcoholic beverages, alleging public health concerns, the AB similarly
ruled that, though possibly falling under the scope of art. XX GATT, the measure
unfairly discriminated foreign like-products, in comparison to local alcoholic
beverages373. In relation to the protection of sea turtles threatened by shrimp fishing
methods, the AB finally decided that import restrictions of shrimps put in place by the
369 GATT (Panel): Thailand – Restrictions on Importation of And Internal Taxes on Cigarettes, Report of the Panel, 7 November 1990, Doc. DS10/R – 37S/200, para. 75. 370 In 1994, a different case (Dolphin) on same ground (tuna fishing and the protection of dolphins), but between the US and Mexico was also conciliated and the GATT Panel decided not to adopt the Report DS29/R of 16 June 1994. 371 Besides, the US had not adopted similar measures in its internal market. “The Panel could therefore not accept it to be justified that the United States prohibition of imports of all tuna and tuna products from Canada […] had been made effective in conjunction with restrictions on United States domestic production or consumption”, and that “prohibition of imports […] had been imposed in response to Canadian arrest of United States vessels fishing […] ”. GATT (Panel): Conciliation. United States – Prohibition of imports of tuna and tuna products from Canada, Report of the Panel, 22 February 1982, Doc. L/5198 – 29S/91, para. 4.12 and 4.13. Again, trade is an easy victim for political conflicts. 372 “The chapeau by its express terms addresses, not so much the questioned measure or its specific contents as such, but rather the manner in which that measure is applied. It is, accordingly, important to underscore that the purpose and object of the introductory clauses of article XX is generally the prevention of ‘abuse of the exceptions’ […]”. WTO (AB): US – Gasoline…, p. 22 (supra, footnote 364). 373 “Shochu and vodka are like products and […] Japan, by taxing imported products in excess of like domestic products, is in violation of its obligations under Article III [GATT]”, WTO (AB): Japan – Alcoholic Beverages…, p. 32 (supra, footnote 365).
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US fell within the scope of art. XX (g), were consistent with equivalent internal
measures, but were too “rigid” and, at the end, extraterritorially imposed an excessively
concrete fishing method and a particular certification scheme, which went beyond a
reasonable, environmentally finalistic requirement to allow third States’ imports of
shrimps or shrimp products374.
In all these cases, States are unsuccessful in alleging an exception under article XX. But
in the practice of the DSB it starts to become clear that there is no fear to use general
international law, through the Vienna Convention on the Law of Treaties, and even
including soft law instruments from other organisations to clarify, in a particular
situation, the link to other International Law regimes and principles375. It has been said
that a weakness of the WTO system is this process that imposes on States a sort of
“probatio diabolica”376 to justify human rights exceptions. But we do not think it is a
problem of the WTO dispute settlement mechanism. For example, the assessment of
“necessity” is more flexible that what it seems. According the DSB, the necessity to
protect public goods “is not limited to what is indispensable”, given that it constitutes a
“continuum”377 with different degrees of necessity, depending on the proportionality
between the measures imposed and the ends pursued. In reality, it looks more like a
triangle according to which the DSB carries a process of “weighing and balancing”378 of
three factors: the measures adopted, the ends pursued, and their degree of WTO-Law
consistency. When a more WTO-consistent measure is reasonably available, it is the
one that States should put in place. As noted with investment disputes, human rights are
not a shortcut for avoiding other international obligations without the due justification.
If States don’t satisfy this test, it is because most of the times we find hidden purposes
374 “The United States did not permit imports of shrimp harvested by commercial shrimp trawl vessels using TEDs [methods] comparable in effectiveness [in protecting sea turtles] to those required in the United States”. WTO (AB): US – Shrimps…, para. 165. 375 “En conjunto, la práctica examinada evidencia que […] han tenido en cuenta muy diversas normas internacionales en la interpretación de los acuerdos abarcados […] la inclusión de instrumentos de soft-law que ha efectuado el Órgano de Apelación, particularmente en el asunto Estados Unidos – Camarones, debe ser ponderada como una operación conjunta para determinar, esencialmente, el contenido del Derecho Internacional general en la materia, sin tomar de forma aislada las concretas referencias a uno u otro instrumento”. X. FERNÁNDEZ PONS: La OMC y el Derecho Internacional. Un estudio sobre el sistema de solución de diferencias de la OMC y las normas secundarias del Derecho internacional general, Madrid – Barcelona 2006, Marcial Pons Ed., pp. 244-245. 376 A. ODENINO: “Soluzione delle controversie nell’OMC e valori non commerciali”, in A. COMBA (a cura di): op. cit., pp. 153-187, at p. 179. 377 WTO (AB): Korea – Measures affecting imports of fresh, chilled and frozen beef, Report of the Appellate Body, 11 December 2000, WTO Doc. WT/DS169/AB/R, para. 161 (at p. 49). 378 Ibíd., para. 164.
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to influence international trade or other non-trade related political and economic issues,
which do not respond to genuine human rights’ concerns.
A paradigmatic (and unique) case is precisely EC-Asbestos, where the then European
Communities are able to show that asbestos prohibition is fully justified step by step:
first, it falls within the scope of article XX GATT (in three areas: health, labour law and
the environment); secondly, it complies with the conditions of the chapeau in the sense
that measures adopted are proportional enough (to the ends pursued), necessary (a
sufficient level of risk is shown) and non-discriminatory (they are applicable to the
same product wherever it may come from, including domestic equivalent measures).
Given that this test usually requires a variable level of scientific evidence, we cannot but
praise the Panel’s acknowledgement that “it is not its function to settle a scientific
debate” –that would amount to put an excessive burden of proof on defendants, but to
“determine whether there is sufficient scientific evidence to conclude that there exists a
risk for human life or health”379. The Panel’s decision was upheld by the Appellate
Body in 2003 modifying some aspects of the reasoning but without touching on its
essential structure. The evidence before the Panel “tend[ed] to show” that asbestos was
“a risk to health rather than the opposite” and “[a] ccordingly, a decision-maker
responsible for taking public health measures might reasonably conclude that the
presence of chrysotile-cement products posed a risk”380. Interestingly, the Panel adopts
this decision taking into consideration ILO Convention 162 on asbestos and the WHO
list of carcinogenic products, being the first a hard law instrument and the latter a soft
law guidance. Besides, we consider that “risks” are quite pragmatically interpreted by
the Panel: there is no need to wait “until scientific certainty, which is often difficult to
achieve, had been established over the whole of a particular field before public health
measures could be implemented”381. This confirmed by the way the rather preventive
approach of the EC-EU and its member States382. We infer that exceptions are perfectly
defensible under the GATT’s notion of “risk”, if WTO-members succeed in passing the
test.
379 WTO (Panel): European Communities – Measures affecting asbestos and asbestos-containing products, Report of the Panel, 18 September 2000, WTO Doc. WT/DS135/R, para. 8.181 and 8.182. 380 Ibíd., para. 8.193. 381 Ibíd., para. 8.221. 382 We further discuss this problematic on the EU’s preventive approach and the legitimation of scientific expertise in Chapter IV, at pp. 257-259.
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This powerful and sound interpretative methodology to approach the GATT has been
extended to other WTO Agreements by the DSB, progressively detailing the
components of the chapeau, which is said to be just “but one expression of the principle
of good faith […] , the application widely known as the doctrine of abus de droit,
prohibit[ing] the abusive exercise of state’s rights”383. Of course, in the area of
preventive human rights, grey zones are frequent and make it more necessary than ever
to build solid defence strategies based on the WTO’s own practice.
With regard to other multilateral trade agreements, the practice under GATT and the
general logic explained so far, have been confirmed and extrapolated, mutatis mutandis.
Under the SPS Agreement, the AB clarified that, in connection to risk assessments and
sanitary measures, preventive measures or, in general, a “precautionary principle” is not
part of customary international law yet (there is no consensus in that regard). Hence,
prevention cannot “override”, by itself, other provisions of international trade
agreements384. This is why a test is also needed to further analyse if preventive
measures are justified under the exception clauses –the door is moderately opened.
The SPS Agreement is, moreover, a good example of how the WTO promotes
coordination between international organisations, recognising their work on standards,
guidelines and recommendations, in relation to which States have room to establish
higher levels of sanitary measures (art. 3.3). Articles 3.1 and 3.2 of the SPS Agreement
establish a presumption of consistency with WTO-Law for measures taken in line with
international soft law instruments (guidelines and standards). In principle, the logic rule
goes: if A then B, no-A means no-B; but in social sciences and legal studies this is not
necessarily the case. Indeed, the AB has ruled that the presumption of consistency for
measures following international standards does not mean that measures taken outside
those standards are presumed to be inconsistent. Otherwise, the legal value of these soft
law guidelines would be excessive and defendants would have an unfair burden of
proof. There may be sanitary measures, not already standardised at an international
level, which are perfectly consistent with the SPS Agreement or, perhaps, be justifiable
under an exception clause. That’s why claimants still have the duty to construct a
sufficiently solid prima facie case, even when SPS measures are outside international
383 WTO (AB): US – Shrimps…, para. 158. 384 WTO (AB): EC – Measures concerning meat and meat products (Hormones), Report of the Appellate Body, 16 January 1998, WTO Doc. WT/DS48/AB/R, para. 121-125.
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standards; only afterwards, it is the defendants’ turn to argue their case385. In other
words, as in EC-Hormones, the fact that the EC measures did not follow a specific
international standard did not “absolve” the US and Canada from showing there is a
prima facie case of violation of the SPS Agreement.
Unfortunately, the problem for the EC came later, to demonstrate a sufficient risk
assessment: in that case, we rather argue that the EC’s priority should have been to put
political pressure on other international organisations (mainly the ISO and WHO) in
order to create guidelines on hormones and, in that process, influence its outcome so as
to satisfy the EC’s sanitary concerns (indirectly affecting SPS trade rules). Put in other
words, the SPS Agreement is probably the best example of “soft law instruments
hardening up”386 through WTO’s practice, and this indirect way to influence SPS trade
rules shouldn’t be undervalued. Concerning articles 2.4 and 2.5 of the TBT Agreement,
also on international standards, in Tuna Dolphin II the AB has ruled that standards
sourced from other organisations still have to be legitimate and, at times, a private
standard might be “more legitimate” than a public one, or vice versa depending on the
case, on its procedural foundations and technical aspects: CSR can play a prominent
role in the harmonization of private and public, hard and soft instruments, even within
trade disputes387.
In sum, to simultaneously influence other standard-setting international organisations,
private and public, can deem to be a wiser complementary strategy, like in a more
recent WTO-complaint by the US on an EU ban of poultry meat treated with certain
chemicals to reduce microbes –still pending388. It will also be interesting to see the
evolution of case DS-495, where a Panel established in September 2015 will have to
analyse the lawfulness of Korean extra-requirements on Japanese food products 385 In this important aspect, the AB reversed the Panel’s previous conclusions: “Only after such a prima facie determination had been made by the Panel may the onus be shifted to the European Communities to bring forward evidence and arguments to disprove the complaining party’s claim”. Ibíd., para. 101-109 (quotes at para. 108 and 109). 386 M. GEBOYE DESTA: “GATT/WTO Law and international standard: an example of soft law instruments hardening up?”, in A.K. BJORKLUND and A. REINISCH (Eds.): op. cit., pp. 148-191, at pp. 160-166 (these pages also discuss EC-Hormones case). 387 C. GLINSKI: “Competing Transnational Regimes under WTO Law”, in Utrecht Journal of International and European Law (Special Issue: Legal Aspects of Corporate Social Responsibility), Vol. 30 No. 78 (2014), pp. 44-66, at p. 63. 388 Dispute No. DS389. The consultation phase has ended and third countries have reserved their right for third-party submissions. For information purposes see the US Trade Representative website: https://ustr.gov/issue-areas/enforcement/dispute-settlement-proceedings/european-communities-%E2%80%93-certain-measures-affe and the WTO website https://www.wto.org/english/tratop_e/dispu_e/cases_e/ds389_e.htm
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regarding the presence of radionuclides after the nuclear accident at Fukushima back in
2011. We will finally have to follow up the EU’s complaint on Russian import
restrictions of live pigs and pork products, alleging concerns on African swine fever
(dispute No. DS- 475), though one would hypothesize that the Ukrainian crisis had an
influence –it chronologically coincided, in parallel to similar problems with European
fruit products usually exported to the Russian Federation.
In relation to the GATS Agreement, art. XIV a) was specifically addressed in US-
Gambling: when there are concurring international obligations, States’ good faith is
demonstrated when they opt for the “least inconsistent” and “reasonably available”
measure in terms of WTO law –just as with investment protection389. In that case, the
US restrictions of internet-based gambling services, on the ground of public order, fell
within the scope of the exception clause, but were found to be partially discriminatory
because, in the particular area of horse racing, only domestic suppliers were exempted
from the restrictions enacted, unlike foreign betting companies390.
A different significant example is when former PM of Brazil Lula da Silva used the
expression “a national interest” to define the fight against HIV/AIDS and, accordingly,
find inapplicable patent legislation under the flexibility of article 31 of TRIPS
agreement391, in coordination with the World Intellectual Property Organisation, the
World Health Organisation and the United Nations High Commissioner for Human
Rights. This is an interesting case where we detect the important role of and interaction
between international organisations and the possibilities they might offer. For good or
for bad, one year after having filed a WTO complaint against Brazil, the US dropped it,
so no Panel could finally discuss the question392. There is a very well-known debate
between the access to medicines and the respect of intellectual property rights, which
389 WTO (AB): United States – Measures affecting the cross-border supply of gambling and betting services, Report of the Appellate Body, 7 April 2005, WTO Doc. WT/DS285/AB/R, para. 307. 390 The discrimination lied in the fact that “only domestic suppliers of remote betting services for horse racing [were exempted] from the prohibitions in the Wire Act, the Travel Act and the IGBA”. Ibíd., para. 369. 391 S. WALKER: The TRIPS Agreement, Sustainable Development and the Public Interest: Discussion Paper, Cambridge-Gland 2001, IUCN, xiv + 60 pp, passim. 392 WTO Reporter: “United States Drops WTO Case Against Brazil Over HIV/AIDS Patent Law”, 26 Junes 2001. A summary of Brazil’s arguments and the wider problematic, for purely informative purposes, see the submission of the Permanent Mission of Brazil to the WTO on behalf of Bolivia, Brazil, Cuba, China, Dominican Republic, Ecuador, India, Indonesia, Pakistan, Peru and Sri Lanka, Thailand and Venezuela: WTO (Council for TRIPS): Paragraph 6 of the Ministerial Declaration on the TRIPS Agreement and Public Health, 24 June 2002, WTO Doc. IP/C/W/355. Also see: https://www.wto.org/english/tratop_e/dispu_e/cases_e/ds199_e.htm
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have both a human rights’ dimension393: to balance the moral and economic rights of
creators and inventors, on one hand, and the access to the benefits of science for the
effective realisation of social rights, on the other hand. After the Doha Declaration on
the TRIPS Agreement and Public Health, the General Council adopted a waiver of art.
31 for “eligible member States”394, mainly LDCs, who had poor pharmaceutical
capacities, allowing them to issue “compulsory licences” to ensure access to certain
medicines under clear conditions and supervision of the Council for TRIPS. In the
meantime, Nairobi’s Ministerial Conference has agreed to extend the freezing of non-
violation and situation complaints dealing with TRIPS Agreement, at least until 2017
when the ministerial conference will re-examine this issue.
Of course, these actions do not solve the causes of pharmaceutical shortages for
developing and least developed countries, but awareness is increasingly widespread395.
Apart from compulsory licences, a different way to obtains medicines at better prices
for developing countries and LDCs is “parallel imports”: once the patent owner
consents to introduce a product in a particular market, it is understood that he loses
control over its commercialisation and it can be resold to a third country wishing to
benefit from a lower price, instead of buying it in the international markets. Parallel
imports are not contemplated by TRIPS and simply constitute a tricky (though
legitimate) circumvention of the treaty, whereas compulsory licences are limitedly
justified under art. 31. These two flexibility strategies under TRIPS (compulsory
licences and parallel imports) are, however, unlikely to bring about long-term solutions,
unless we really solve the twofold root of the problem396: transfer of technology and
capacity building together with further investigation on ‘neglected diseases’.
A very frequent problem of TRIPS is the production of generic medicines and the
patent’s owners enjoyment of their rights, while “both society and the scientist have a
393 A human rights approach to intellectual property by A. R. CHAPMAN: “Core obligations related to ICESCR Article 15 (1)(c)”, in and A. R. CHAPMAN and S. RUSSEL: Core obligations: Building a Framework for Economic, Social and Cultural Rights, Belgium 2002, Intersentia Ed., pp. 305-331, at pp. 315 ff. 394 WTO (General Council): Implementation of Paragraph 6 of the Doha Declaration on the TRIPS Agreement and Public Health, Decision of 2 September 2003, WTO Doc. WT/L/540. 395 D. ZAPICO ALONSO: “La regulación de los derechos de propiedad intelectual y el acceso a medicamentos esenciales”, in A. EMBID IRUJO (Dir.): Comercio internacional y derechos humanos, Pamplona 2007, Aranzadi Ed., pp. 175-216, at pp. 197-200. 396 M. ORTEGA GÓMEZ: Patentes farmacéuticas y Países en Desarrollo, Madrid 2011, Difusión Jurídica Ed., pp. 85-87.
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legitimate interest”397 in using discoveries before the expiration of the 20-year patent
term. In 1997 the European Communities filled a complaint against two aspects of a
Canadian patent regulation, mainly affecting pharmaceutical products. In the first place,
Canada had allowed eventual competitors of a patent owner to initiate the process of
obtaining the relevant governmental permits before the patent term had expired, so that
competitors could sell their products immediately after the end of the patent. The EC
alleged that governmental regulations of pharmaceutical products actually reduce that
20-year exclusivity, as a matter of fact circa 40/60% shorter, so that the marketing
approval process for competitors shouldn’t be initiated before the exact end of the
patent term, alleging it would be inconsistent with article 27 TRIPS. However, the Panel
rejected this reasoning alluding to the above-cited “legitimate interests”, understood as a
broader notion than mere ‘legal interests’398.
As for the delays generated by public marketing licences, the Panel reframes or
refocuses it on whether it is discriminatory or not. According to the Panel, all producers
are subject to such reduction of the “effective period of market exclusivity”, so it is not
discriminatory –implicitly confirming that the fact of alleging an exception clause does
not liberate us from showing it is not used in a discriminatory manner. Many States,
acting as third parties, were in favour of “granting compensatory patent term
extensions” due to the regulatory delay that reduces de facto the effective period of
patent exclusivity. However, the Panel interestingly noted there was still no
international consensus with regard to such a compensatory extension of the patent
term399, partially benefiting the prompter placing in the market of generic medicines
397 WTO (Panel): Canada – Patent Protection of Pharmaceutical Products, Report of the Panel, 17 March 2000, WTO Doc. WT/DS114/R, para 7.69. 398 “In sum, after consideration of the ordinary meaning of the term “legitimate interests” as it is used in Article 30, the Panel was unable to accept the EC’s interpretation of that term as referring to legal interests pursuant to article 28.1. Accordingly, the Panel was unable to accept the primary EC argument with regard to the third condition of Article 30. It found that the EC argument based solely on the patent owner’s legal rights pursuant to Article 28.1, without reference to any more particular normative claims of interest, did not raise a relevant claim of non-compliance with the third condition of Article 30”. Ibíd., para 7.73 399 “On balance, the Panel concluded that the interest claimed on behalf of patent owners whose effective period of market exclusivity had been reduced by delays in marketing approval was neither so compelling nor so widely recognised that it could be regarded as a “legitimate interest” within the meaning of Article 30 of the TRIPS Agreement. Notwithstanding the number of governments that had responded positively to that claimed interest by granting compensatory patent term extensions, the issue itself was of relatively recent standing, and the community of governments was obviously still divided over the merits of such claims. […] The Panel believed that Article 30’s “legitimate interests” concept should not be used to decide, through adjudication, a normative policy issue that is still obviously a matter of unresolved political debate”. Ibíd., para. 7.82.
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once expired the patent at stake. Nonetheless, the Panel concluded against the second
question of the dispute inasmuch as it considered inconsistent with art. 28.1 and 30 the
Canadian regulatory exception that allowed manufacturing and stockpiling patented
products, regardless of the fact that they would not be sold before the expiry of the
patent –the Panel applied here the principle of effectivity and understood that such
exception substantially contravenes the patent’s owner exclusionary rights400. But
initiating the administrative procedure to obtain the regulatory permits for a generic
medicine, before the end of a patent, is then compatible with TRIPS Agreement. In sum,
the third flexibility strategy under TRIPS (the so-called ‘Bolar exception’ or ‘regulatory
exception’), as seen in the Canadian case, was the result of WTO’s jurisprudence. This
‘regulatory exception’ passed the test of the Panel and the time lag caused by
governmental permits can be circumvented: potential competitors can accelerate the
merely bureaucratic procedures even before the patent expires, so that generic medicines
can be placed in the market immediately after the expiration of the patent.
TRIPS Agreement is certainly a curious example of how essentially private interests
(patents and patent owners’ rights) are protected by States in an international dispute
resolution mechanism against other States’ regulations, other than traditional diplomatic
protection, as a parallel road to the Paris Convention for the Protection of Industrial
Property and the Berne Convention for the Protection of Literary and Artistic Works,
and accepting rather loose connections401 between the origin of corporations involved
and the country that decides to take over and bring the issue to the attention of the DSB.
In conclusion, the reasoning started with article XX GATT and has progressively been
detailed through the DSB’s practice, now extended to other agreements (GATS, TRIPS,
SPS…) and their respective exception clauses. The use of an exception clause has to be
justified and is not unconditional. The WTO-consistency test has three basic elements:
measures shall be necessary, proportional and non-discriminatory, which are not new or
surprising concepts in international tribunals or arbitrage seats against the abuse or
misuse of States’ prerogatives. We have also noted that the DSB has a perfectly
sharable approach to different situations and cases: realistic –close to the concrete 400 “[T] he rights of the patent owner are generally viewed as a right to prevent competitive commercial activity by others, and manufacturing for commercial sale is a quintessential competitive commercial activity, whose character is not altered by a mere delay in the commercial reward”. Ibíd., para. 7.35. 401 C. WADLOW: “The Beneficiaries of TRIPs: Some Questions of Rights, Ressortissants and International Locus Standi”, in The European Journal of International Law, Vol. 25 No. 1 (2014), pp. 59-82, at p. 74.
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factual evidence; explicitly integrative –no fear to public international law; and open to
progressive interpretations of treaties and agreements –in the light of preambles, the
travaux préparatoires, customary international law in other fields like the environment
or health, and the practice of other international organisations (even soft law
instruments). It starts to be clear that it doesn’t seem difficult to show that a particular
measure falls within the scope of exception clauses; problems rather arise when it
comes to demonstrate that measures are sufficiently justified. It does not seem to us an
insuperable burden of proof, provided States duly manage their overlapping and
concurring international obligations in good faith. It is now the responsibility of
member-States to effectively and reasonably use these open windows: it will depend on
how they use the inherent multilateral, consensual and evolutionist402 genetics of WTO
Law.
2.3 Soft law and the potential of international organisations
2.3.1 Soft law and corporate human rights respect
Notwithstanding the fact that we discuss in detail the value of soft law through the
European Union’s practice in Chapter IV, we shall make some initial remarks to serve
as a starting point. The debate on soft law hides the last dichotomy we did not address
in the first chapter, i.e., the one opposing mandatory and voluntary schemes. In the first
chapter, we addressed the problems of the ‘treaty route’, both in theory and practice, but
that problematic is the consequence of a previous choice: hard law vs. soft law, which
implies more theoretical (if not ideological) questions. Of course, hard law enthusiasts
will immediately identify themselves with the defence of a new international treaty on
business and human rights. And soft law supporters will say that everything has to be
402 “[T] he possibilities of collectively adopting subsequent interpretations, setting up new standardising bodies, and adapting the interpretation of WTO Law in response to the practice of members and the evolution of international law, allow the development of WTO Law at the margins, by a majority of members and with considerably low formal requirements. As a result, the mechanisms of multilateral law-making allow members to produce incremental adjustments to WTO Law while preserving its coherence as a legal system”. G. VIDIGAL: “From Bilateral to Multilateral Law-making: Legislation, Practice, Evolution and the Future of Inter Se Agreements in the WTO”, in The European Journal of International Law, Vol. 24 No. 4 (2013), pp. 1027-1053, at p. 1053.
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left to companies’ discretion because mandatory schemes would place an “unwarranted
burden on business”403.
It is often heard that corporate social responsibility is only about soft law; that it
responds to a negative feudalisation caused by global capitalism: our “age of neo-
medievalism” would have diversified the sources of power, legitimacies and norms,
thus creating soft instruments aimed at clarifying some private (corporate) duties –
always softly404. In practice, we have found both voluntary and mandatory aspects and,
contrary to a widespread belief, minimum legal requirements are also part of CSR,
ideally to go beyond them so as to achieve “best practices” –but always within the
framework of legal compliance. In sum, in view of the current international practice,
what we actually infer from our analysis is an interaction between both hard and soft
law instruments in the area of corporate human rights respect.
This mixture responds to the fact that mere self-regulation is not sufficient after having
detected many traps and contradictions. For example, in the occasion of the 2014
Winter Olympic Games in Sochi (Russian Federation), many companies could not do
anything to avoid sponsoring the games –contrariwise, it was part of their ‘CSR’,
despite the increasing unease in relation to widespread discrimination in Russia on the
grounds of sexual orientation, affecting also some athletes405. We have mentioned other
risks of CSR, like ‘blue washing’ –when the UN logo is unduly used in the Global
Compact by poor performing companies, or ‘green washing’ when only a small
percentage of ‘green providers’ hides essentially the same bad performance in supply
chains, phenomena that have been investigated in many areas406. The many examples
available have led to some authors to think that CSR is just about voluntary and
403 H. CHOUDHARY: “Mandatory Corporate Social Responsibility: An Unwarranted Burden on Business”, in European Company Law, Vol. 10 No. 4/5 (2013), pp. 156-160, passim. 404 C. M. BAILLET: “What is to become of the human rights international order in an age of neo-medievalism?”, in C.M. BAILLET (Ed.): Non-State Actors, Soft Law and Protection Regimes. From the Margins, Cambridge 2012, Cambridge University Press, pp. 95-124, at pp. 119-123. 405 J. van DETTA: “Sexual Orientation, Human Rights and Corporate Sponsorship of the Sochi Olympic Games: Rethinking the Voluntary Approach to Corporate Social Responsibility”, in Utrecht Journal of International and European Law, Vol. 30 No. 78 (2014), pp. 99-124. 406 Suffice the example of many tobacco produces apparently recurring to green supply chains to actually hide the fact that most of purchases still come from previous circuits involved in child labour and tobacco-related deforestation: M. OTAÑEZ and S.A. GLANTZ: “Social Responsibility in Tobacco Production? Tobacco Companies’ use of green supply chains to obscure the real costs of tobacco farming”, in Tobacco Control, Vol. 20 No. 6 (November 2011), pp. 403-411.
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“ceremonial commitments” seasoned with an institutionally “organised hypocrisy”407,
maintaining the imbalances between developed countries and the rest of the world. But
the CSR movement has surely served to reveal these contradictions to a wide public
and, from a social perspective, more and more people think that “benefits that come
from human rights violations are illegitimate, if not directly illegal”408 –extrapolating
the so-called doctrine of the fruit of the poisoned tree. Shall we recall SPP vs. Egypt
recognising lucrum cessans only until the entry into force of the UNESCO Convention
on Wold Heritage, after which any benefit would have been internationally illegal; as in
other investment and trade situations analysed in the precedent section in terms of ‘open
windows’. For us, the obvious deficits and traps of CSR are not enough to totally reject
it; given that we have defined it as a human rights strategy mixing hard and soft law
instruments, our conclusion is on its relative usefulness and certain potential;
nevertheless, it is clear that a merely voluntary approach does not seem sufficient.
More generally, the expansion of soft international law is frequently criticised in terms
of a feudalisation of global regulation, to primarily serve private interests, a sort of post-
modern lex mercatoria409. But this argument simply forgets that CSR and soft
international norms are nothing new under the sun. Besides, they are not necessarily
negative: the so-called “Incoterms” is a set of international trade terminology created in
1936 by the International Chamber of Commerce, also responsible for the “Uniform
Customs and Practices for Documentary Credits”, operative in 175 countries.
Continuing with the banking sector, we shall also cite the “Basel III Guidelines” on risk
management formulated by the Committee of the Bank for International Settlements (a
mix private-public institution whose members are central banks, but not exactly an
intergovernmental one); the International Financial Reporting Standards are the product
of another private institution (the International Accounting Standards Board). There are
examples in other areas: the World Wide Web Consortium, responsible for the World
407 A. LIM and K. TSUTSUI: “Globalization and Commitment in Corporate Social Responsibility: Cross-national Analyses of Institutional and Political-Economy Effects”, in American Sociological Review, Vol. 77 No. 1 (February 2012), pp. 69-98, at p. 88. 408 Shall we recall SPP vs. Egypt recognising lucrum cessans only until the entry into force of the UNESCO Convention on World Heritage, after what any benefits would have been internationally illegal; as in other investment and trade situations analyse in the precedent section. S. DEVA: Regulating Corporate Human Rights Violations. Humanising Business, London-New York 2012, Routledge Ed., p. 139. 409 “The use of private-sector standards, codes, and best practices –a kind of contemporary version of the medieval lex mercatoria– is a major and increasing factor in international business”, says L.L. HERMAN: “The New Multilateralism: The Shift to Private Global Regulation”, Institute C.D. Howe Commentary, No. 360, Canada (August 2012), 17 pp., at p. 15.
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Wide Web rules “totally outside of international treaty”; and the work of the
International Organisation for Standardisation (ISO), a non-governmental organisation
whose numerous standards are just unavoidable in international business410.
Precisely in the area of global financial regulation is where soft law is stronger or, at
least, a subject that more evidently shows that “soft law can have its own hard
edges”411, with its positive and negative effects. Of course, the abundance of soft norms
in international finances can be partially linked to 2008 global economic crisis: besides
a good number of market causes, it is true that there have been failures in the successive
Basel Accords and Principles, in international accounting standards and credit-rating
agencies –in sum, in the “global systemic risk regulation” 412. The crisis might have
marked a turning point towards a bigger public input and stricter regulation of
derivatives, hedge funds and rating agencies413, a trend that still has to be confirmed in
the future.
In this context, the critique can be easily summarised in Marxist terms: for the capital, it
was not enough to control the means of production; it now wants to control the means of
production of norms, by fostering soft law in a frame of global benefits but fragmented
jurisdictions. Against this background, it must first be said that sources of legitimacy
and norms have historically been diverse: even in Roman law we might find ‘soft law’
examples, starting with the difference between potestas and auctoritas, the latter being
the simple capacity to persuade but deprived of the formal competency to command414.
Those who point out soft law’s positive effects frequently refer to a wider flexibility to
adapt to changing scenarios and more easy corrections or changes when needed, while
the negative side would be an alleged lack of democratic legitimacy in the rule-making
process. Equally positive would be its capacity to set itself up as an interpretation of
hard law instruments, which at times would otherwise be difficult to operationalise, but 410 Ibíd., pp. 6-8 (for all the examples cited in this paragraph). 411 C. BRUMMER: Soft Law and the Global Financial System. Rule Making in the 21st Century, Cambridge 2012, Cambridge University Press, p. 174. 412 Ibíd., pp. 213-229. 413 S. PAGLIARI: “Who Governs Finance? The Shifting Public-Private Divide in the Regulation of Derivatives, Rating Agencies and Hedge Funds”, in European Law Journal, Vol. 18 No. 1 (January 2012), pp. 44-61. 414 On the auctoritas: “Questo concetto prettamente romano, quistessenza dell’aristocratica società tardo republicana, esprime bene l’idea della normatività debole, non implicando la competenza di comandare, ma la semplice capacità di persuadere”. T. GIARO: “Dal Soft Law moderno al Soft Law Antico”, in A. SOMMA (a cura di): Soft Law e Hard Law nelle società postmoderne, Torino 2009, G. Giappichelli Ed., pp. 83-99, at p. 93.
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the other side of the coin is its obscure judicial review. Again as a starting point and
before this research focuses on the EU’s contribution, the most authoritative and cited
reference on soft law is Abbott and Snidal’s research, according to which it is a
“continuum” far away from Kelsen’s positivist tradition415, to rather show the “deep
connection of law and politics”416. We already warned on the tight link between law and
politics in the introduction, in line with Max Weber’s thinking. Indeed, the influence of
the political debate is unavoidable and it would be naïve not to recognise that
companies are “already engaged in these governance processes”417. At least the largest
corporations are de facto both economic and political actors, so that some kind of
political ingredients need to be included in the CSR discourse and development, like
democratic legitimacy and human rights, opened to all kind of stakeholders418 from a
pragmatic standpoint.
In IHRL, the so-called ‘name and shame’ strategies have generally failed to improve
States’ human rights performance or, at least, to generate long-term and structural
improvements. In our view, name and shame strategies are more likely to work in the
case of TNCs, unlike States, since the market’s reward or punishment directly threatens
their obvious raison d’être: reputational risks may have a translation into their
economic performance, provided there exists a certain level of consumer’s awareness.
This is a kind of “social sanction”419, which has never ceased to exist whether or not the
positivists like it420, coherently with our sociological approach to the formation of
415 As expected in legal studies, the positivist tradition is strong and considers, all in all, that soft law is just a “trap” and a “legal metaphor”: L. BLUTMAN: “In the Trap of a Legal Metaphor: International Soft Law”, in International and Comparative Law Quarterly, Vol. 59 No. 3 (July 2010), pp. 605-624. 416 In sum, soft law is sometime a “way station to harder legalisation”, with advantages and disadvantages shared with hard regulation, and some exclusive benefits and costs. K.W. ABBOTT and D. SNIDAL: “Hard and Soft Law in International Governance”, in International Organization, Vol. 54 No. 3 (Summer 2000), pp. 421-456, at pp. 423-424 and 455 (quotes). 417 A.G. SHERER and G. PALAZZO: “Towards a Political Conception of Corporate Responsibility: Business and Society Seen from a Habermasian Perspective”, in The Academy of Management Review, Vol. 32 No. 4 (October 2007), pp. 1096-1120, at p. 1098. 418 The so-called “stakeholderism” is one of the most important innovations brought by the CSR movement: B. DUBBACH and M.T. MACHADO: “The importance of stakeholder engagement in the corporate responsibility to respect human rights”, in International Review of the Red Cross, Vol. 94 No. 887 (Autumn 2012), pp. 1047-1068, at pp. 1053-1058. 419 On this concept in international law, see: A. TANZI: Introduzione al diritto internazionale contemporaneo, Milano 2013, CEDAM Ed., pp. 51-53. 420 Amusingly, Prof. Tanzi further says: “Il convincimento più diffuso che si incontra negli student dopo il primo anno di studio in una facoltà di giurisprudenza –e che li fa apparire come dei fedeli epigoni, ora del positivismo giuridico, ora della kelseniana “dottrina pura del diritto”, e, nonostantante ciò (o proprio per questo), comunque scettici nei riguardi del diritto internazionale – è quello della natura coercitiva dell’ordinamento giuridico. [...] Tuttavia, sarebbe errato sostenere che la regola giuridica operi
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International Law. And quite more importantly, soft law instruments can contribute to
extend an international practice and generate, in the long term, a consuetudine that can
be said to follow an opinio iuris if sufficiently consistent and expanded421.
In this line, soft norms can also contribute to effectively ‘open’ the windows of
opportunity we have detected concerning international trade and investments, as long as
we renounce to maximalist demands and wish lists. However, the list of pros and cons
is endless and it is not our objective to settle the debate on whether soft law advantages
compensate the eventual shortfalls and gaps: we only suggest the answer is probably a
matter of degree, that is, the quantity of soft instruments and how they are used.
As said before, we are no longer in the initial choice between hard law and soft law. As
a matter of fact, CSR is not anymore an exclusively soft law area. At the end of the day,
the question is wrong: it is “not an either/or proposition: both are necessary”422. We
have rather observed an interaction and intermix of hard and soft norms. For the time
being, we may conclude that soft law is helping or completing IHRL, or has shown its
potential to do so, in two essential aspects: prevention and horizontalisation with regard
to TNCs, while bypassing some crucial legal problems that could block for a long time
any hard law initiative (for example, international subjectivity).
As said before, we referred to this in further detail when we criticised the ‘treaty route’.
Ultimately, only States have to respect their international obligations and, even though
many academics put forward the need of designing a specific legal personality for
transnational companies and individuals, we don’t think this is a really effective
shortcut to improve respect for human rights when international businesses are
involved, as we have also justified that the proliferation of biding international treaties
isn’t either always the best way to materially foster human rights and, hence, part of the
efficacemente venendo rispettata esclusivamente in ragione dell’esistenza e del funzionamento di meccanismi sanzionatori”. Ibíd., p. 50. 421 Soft law would have a “function of crystallisation” [funzione di cristallizzazione]. Ibíd., p. 153. It has further been studied that soft instruments have widely been used when international tribunals had to decide whether a certain practice already constitutes a consuetudine or not, and also in the course of treaties’ negotiations within the travaux préparatoires. Ibíd., pp. 151-165. 422 H.S. DASHWOOD: “Corporate Social Responsibility and the Evolution of International Norms”, in J.J. KIRTON and M.J. TREBILCOCK (Eds.): Hard Choices, Soft Law. Voluntary Standards in Global Trade, Environment and Social Governance, Hants (England) 2004, Ashgate Publishing Company, pp. 189-202, at p. 199.
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usefulness of complementary soft law instruments423. In order for human rights treaties
to have –in and of themselves– tangible effects in the field, we usually need to be in
democratic countries with relatively strong CSO’s and NGOs, preferably with solid
international connections; otherwise, the real impact of international human rights
treaties has proved a very limited one424. More regulation does not automatically and
necessarily lead to better compliance, neither in internal legal orders nor at an
international level. We therefore have to abandon ideological misunderstandings on
what regulation is and its real effectiveness and demystify hard law –while avoiding the
other extreme of uncritically praising soft law. In our subject, the effectiveness of IHRL
is not obvious in view of the regularity of violations. As pointed out by Prof. Douglass
Cassel, the real impact of a human rights treaty will largely depend on the institutional
environment and its valuable effects have to be “understood as part of a broader set of
interrelated, mutually reinforcing processes and institutions –interwoven strands in a
rope– that together pull human rights forward, and to which international law makes
distinctive contributions”425.
Consistently with our analysis in Chapter I, we therefore propose overcoming certain
blocking dichotomies and this includes the apparently irreconcilable opposition between
mandatory and voluntary schemes. International practice shows an interaction and
combination of both policy options. We can also anticipate that the EU, at a regional
level, has followed a sort of third way consisting of a voluntary within mandatory
approach, as it will be developed in the second part of this work. In this line, we take as
a premise that hard and soft law are “complements, not alternatives”426.
423 O. MARTÍN-ORTEAGA: “La diligencia debida de las empresas en material de Derechos Humanos. Un Nuevo estándar para una nueva responsabilidad”, in F.J. ZAMORA, J. GARCÍA CIVICO, L. SALES PALLARÉS (Eds.): La responsabilidad de las multinacionales por violaciones de los derechos humanos, Madrid 2013, Universidad de Alcalá - Defensor del Pueblo, pp. 167-192. 424 E. NEUMAYER: “Do International Human Rights Treaties Improve Respect for Human Rights?”, in The Journal of Conflict Resolution, Vol. 49 No. 6 (2005), pp. 925-953. 425 D. CASSEL: “Does Human Rights law make a difference?”, in Chicago Journal of International Law, Vol. 2 No. 1 (Spring 2001), pp. 121-135, at p. 135. 426 N. BAYNE: “Hard and Soft Law in International Institutions: Complements, not alternatives”, in J.J. KIRTON and M.J. TREBILCOCK (Eds.): op. cit., pp. 347-351.
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2.3.2 The role of international organisations
The media and popular imaginary expect any ‘expert’ worthy of that name to
mercilessly criticise international institutions. It is commonplace to blame international
organisations under any pretext and an interestingly similar discourse demonises TNCs.
Black and white analyses seem to us oversimplifying and useless; we will now make
some institutional remarks.
In a gradually liberalised world economy where international contracts and investments
are widespread, States and International Organisations have a crucial role to play. The
trade of diamonds and the Kimberly Process Certification Scheme provides again an
enlightening example of the radical importance of the institutional environment to foster
CSR, including “carrots and sticks”427 in a mixed legislative-voluntary scheme and
tripartite negotiations involving States, NGOs, CSOs and the industry, all of which
should ideally have a proved legitimacy: States to be preferably democratic and
institutionally solid; NGOs and CSOs have legitimate interests and be representative;
and the industry should be consolidated and agree on the starting point (the need to
tackle the adverse impacts of their business activity). In our view, we fully agree with
the idea that institutionalisation is the key to “translate CSR rhetoric into concrete
actions”428 and, in this respect, international organisations have played a prominent role,
though improvable or unfinished.
In our view, international institutions can decisively contribute to the development of a
human rights-friendly business milieu. Similarly to human rights treaties, corporate
social responsibility –understood as a mixture of hard and soft law instruments mainly
centred on ‘business and human rights’ issues– is more likely to have an effect the
stronger is civil society and the “institutional terrain within corporations operate”429, to
name just a few aspects: public pressure, trade unions, NGOs, monitoring and
inspection bodies, proper legislation encouraging and framing CSR, a competitive and
healthy economy and, of course, a democratic regime.
427 F. BIERI and J. BOLI: “Trading Diamonds Responsibility: Institutional Explanations for Corporate Social Responsibility”, in Sociological Forum, Vol. 26 No. 3 (September 2011), pp. 501-526, at p. 507. 428 Ibíd., p. 502. 429 J.L. CAMPBELL: “Why would Corporations Behave in Socially Responsible Ways? An Institutional Theory of Corporate Social Responsibility”, in The Academy of Management Review, Vol. 32 No. 3 (July 2007), pp. 946-967, at p. 962.
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Both national and international institutions have a critical role to define the framework
within which they discipline the diverse initiatives, facilitate and promote corporate
human rights respect. The institutional environment is the reason why, for example, this
research is peppered with tangential references to other problems, being a prominent
example the issue of fragile and failed states, but also other factors like aid and
development430 or political and legitimacy questions
In developing and least developed countries, public debt imbalances, economic
weaknesses and needs are priorities that tend to shadow their human rights obligations.
On the companies’ side, we have already stated that it is Manichean and inaccurate to
only blame companies, alleging that they specifically look for weak State regimes.
However, generally speaking, the business tendency will be more likely to adapt to –
let’s say– undesirable situations in third countries rather than put at risk investments or
benefits. We can now add another reason why only soft self-regulation is insufficient:
once again, the institutional environment of developing and least developed countries.
Strategies based solely on the self-interest of companies (the ‘business case’) clearly fall
short; public inputs and frames are needed, on which international organisations can
provide significant guidance to overcome and address, in parallel, weak governance and
poverty in those countries.
Concerning the politics of democracy and legitimacy issues, the critiques against soft
law are ultimately rooted in alleged problems of democracy and legitimacy within
international institutions, the ones who create those soft instruments. We must note,
even at the risk of being repetitive, that IOs are created by and for States, so the latter
are the key-players. As rightly indicated by Norberto Bobbio, the international
community will be democratic only when all States are themselves democratic and, vice
versa, a State’s democracy will be imperfect and experience problems in the
international community if there are still non-democratic regimes in the world431. This
situation has its reflection within international institutions in terms of transparency,
accessibility, public participation and human rights performance. In this vein, we should
stop using the 19th century-logics on nation-state democracies to design the multilevel
430 Blowfield argues that CSR has reinvented the meaning of development; only time will tell if positive changes will come but, for the moment, it has been useful to uncover hidden issues in terms of supply chains and raise social awareness. M. BLOWFIELD: “Corporate Social Responsibility: Reinventing the Meaning of Development?”, in International Affairs (Royal Institute of International Affairs), Vol. 81 No. 3 (May 2005), Monographic issue: Critical Perspectives on Corporate Social Responsibility , pp. 515-524. 431 N. BOBBIO: op. cit., pp. 416-417 and pp. 444-445.
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international governance and rather start thinking of IOs differently. Perhaps novel
forms of international democratic accountability appear someday. For their success,
they will have to overcome the three main problems of multilevel governance: the
“weak visibility” of its inherent networks, “their selective composition and the
prevalence of peer over public forms of accountability” 432.
In this regard, functionalism still dominates the theory of international organisations,
with the immunity doctrine and the ‘members-driven’ leitmotiv at its heart. In practice,
the predominant functionalist theory of IOs fails to assess the real role of politics within
IOs and the complexity of overlapping functions and powers, interface subjects and
accountability problems433. In the first section of this chapter we have mentioned a
number of overlapping CSR initiatives undertaken by different IOs. And we witness
timid improvements that occur in the normal way many things happen in the
international sphere –through simple faits accomplis. In effect, nowadays IOs start to
coordinate each other policies and engage in unprecedented manners with actors other
than member-States, which shows a growing openness; at the same time, the doctrine of
human rights mainstreaming is more widely accepted to introduce human rights
concerns into the practice of specialised institutions, of course without turning around
their founding goals. In the second part of this research, we will see that the EU, as an
“extreme”434 international organisation, accordingly carries substantive CSR to the
extreme, compared to the global instruments. This change or evolution of IOs is in its
infancy and silently challenges the above-mentioned limits of the functionalist theory of
IOs. Furthermore, the daily practice and work of IOs could be explained in terms of
‘implicit powers’ and escapes traditional moulds435. There are organisations more
geared to services (the UN) and others tend to serve as fora (the WTO)436, but this
classification does not provide us with clear-cut distinctions either.
432 Y. PAPADOPOULOS: “Problems of Democratic Accountability in Network and Multilevel Governance”, in European Law Journal, Vol. 13 No. 4 (July 2007), pp. 469-486, at pp. 473-478 and 480-483. 433 On the limits of the “scope of functionalism” see: J. KLABBERS: “The Transformation of International Organizations Law”, in The European Journal of International Law, Vol. 26 No. 1, pp. 9-82, at pp. 30-33. 434 Ibíd., at p. 33. 435 J. KLABBERS: An Introduction to International Institutional Law, Cambridge 2009, Cambridge University Press, pp. 53-73. 436 R.W. COX and H.K. JACOBSON: The Anatomy of Influence. Decision-making in International Organisations, New Haven – London 1972, Yale University Press, pp. 5-6.
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That said, it is difficult to evaluate to what extent an IO, created by States as “an
institution with a life of its own”, can become a threat to States themselves and, at
times, eventually act against their interests, which is very much the case in many
delicate human rights situations. Perhaps the remaining insistence on functionalism and
the recurrent limitations of IOs are, in fact, the States “response to the Frankenstein
problem”437 –thus preventing IOs from becoming a ‘monster out of their control’. Apart
from theorisations, the fact is that IOs legitimacy will largely depend on two factors: 1)
the number of democratic States within the international community; and 2) the
formation of a specific sociological legitimacy for IOs, precisely built through their
compliance of International Law and, very prominently, of human rights law438.
Finally, by way of conclusion, the following points indicate some of the most prominent
contributions that could be made by international organisations at a global scale:
1) To build an atmosphere of trust and dialogue, indispensable basis on which
the international society can conduct negotiations and reach agreements;
2) Mainstream human rights into their founding objectives, whatever these are;
3) Give priority to capacity-building in developing and least developed
countries. Capacity-building should include all actors: States, institutions,
policy makers, investors, traders and producers, companies, lobbies, judges
and arbitrators, workers and consumers, NGO’s and CSO’s;
4) Prioritise good governance. Essential components are democracy, rule of
law, predictability, political stability, transparency and access to justice;
5) Link the agendas of the different international organisations;
6) Promote cross-cutting public agencies, both national and international, to
help address transversal human rights issues, capable to put in place tailored
measures and initiatives adapted to each economic sector;
437 A. GUZMAN: “International Organizations and the Frankenstein Problem”, in The European Journal of International Law, Vol. 24 No. 4 (2013), pp. 999-1025, at p. 1018. 438 This would lead to a “reputation” that would serve as the basis for legitimacy. K. DAUGIRDAS: “Reputation and the Responsibility of International Organizations”, in The European Journal of International Law, Vol. 25 No. 4 (2015), pp. 991-1018, at pp. 1007-1010.
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7) Support negotiations as usual, but also at a domestic level providing with the
organisation’s expertise;
8) To work on international standards is critical in order to extrapolate good
governance to the international sphere and, through harmonisation, attain a
predictable international order. Proposals ought to be clear, concise,
pragmatic and understandable, built on a long-term and technical vision;
9) For the success of this work on international standards, organisations could
create reliable information systems, including human rights indicators, as
objectively as possible;
10) Bring all stakeholders to the table and make sure their voice is heard,
extending the external participation channels in the decision-making process,
even though the final decisions fall on member-States;
11) To structure and spread public-private dialogue and PPPs, at an internal
level and internationally. International organisations could without fear
engage in more and more direct dialogue with the private sector –there is no
reason why this dialogue might go against their intergovernmental nature
and scope.
12) Lastly, the possibility of promoting private sector partnerships could be
explored by governments and international organisations to expand good
practices and encourage social responsibility guidelines and codes of
conduct.
13) Promotion of “human rights impact assessments”439, inspired in the
environmental ones.
The successful interplay of the foregoing bullet-points will mark the final contribution
of IOs in two crucial aspects: the progressive development of International Law in
relation to business and human rights, and the promotion of an extended and consistent
States’ practice in the same direction.
439 There is a lot of pending research on ‘human rights impact assessments’ applied to areas such as investments and trade, which would foster the preventive aspects of IHRL. A practical and interesting proposal to assess trade agreements at: S. WALKER: The Future of Human Rights Impact Assessments of Trade Agreements, Antwerp-Oxford-Portland 2009, Intersentia Ed., xiv + 252 pp. passim.
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CHAPTER III
Corporate Social Responsibility in the European Union
CSR is somehow linked to many different policies of the European Union, even before
being labelled and receiving that name. One of its related issues is sustainable
development: fight against poverty is essentially articulated through development
policies which are, since 2000, tightly related to the MDG’s of the United Nations.
However, this commitment to human rights and engagement towards developing
countries goes beyond mere development policies and, more and more, affects other
European actions such as commercial and neighbourhood policies. In this sense, we
need to analyse to what extent CSR and fight against poverty have started to overlap
and to create synergies with other EU policies, advancing in the achievement of the
MDG’s and the post-2015 agenda.
The EU has developed CSR on three different levels:
1) Within the international framework in this subject, that is, in accordance with
codes and norms of other international organisations and some particular
initiatives of member States.
2) Secondly, a specific frame was born after the Green Paper on Corporate Social
Responsibility (2001) together with an important Communication of the
Commission on CSR (2002), which constitute the initial benchmark, followed
by a rich documentation functioning as a general guidance.
3) Lastly, the EU has introduced CSR in almost any of its policies, which now
include CSR objectives. Among these policies, the most important fields are the
cooperation and development, environment, employment, consumers’ protection
among others.
3.1. The emergence of CSR in the EU
3.1.1. From a limited concern ad intra to a wider development goal
CSR could initially be understood as another complementary way to promote a fully
integrated interior market and to facilitate the enlargement eastwards, making it
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compatible with the European values. Its link with more general human rights and
development goals has been understood more recently, in particular for those countries
with which the EU has commercial, financial or political-strategic relations.
The obvious problem at the beginning is that the EU’s CSR objectives were far from
reflecting the real problems and needs of developing or under-developed countries, as
summarized in the UN goals. The level of development of member States might explain
why European companies usually didn’t include among their CSR objectives the most
prominent human rights issues, such as the reduction of extreme poverty or child labour,
which are not urgent problems inside the EU but core goals of the 2015 world agenda
and the new SDGs for 2030. Nevertheless, European companies have the engagement of
promoting the respect of the same norms and codes of conduct in all countries in which
they operate, regardless of the usual breach of fundamental rights in some of these
places.
Delors declaration in 1993 against social exclusion is the most repeated key date when
studying the origin of CSR, inaugurating the European Union after Maastricht with a
clear social agenda: “[t]he social dimension is the Achilles heel of a Community that is
misunderstood, that lacks grassroots support”440. It could have been a perfectly
forgettable political statement; its importance a posteriori lies in the impact it had in the
private sector, leading to the creation of European networks of companies, and because
it helped to launch a new conception of a social Europe, linking it both to economic
prosperity and to its external action: “without economic muscle the Community will be
in no position to demonstrate solidarity with countries suffering from internal divisions
and underdevelopment, or to exert any influence on world affairs”441. The inclusion of
new social concerns is logically related to the introduction in Maastricht of the
European citizenship.
Delors’ triangle linking the social agenda, the economic integration and prosperity
together with the EU international role, constituted the first step towards the
development of new non-economic concerns of the European Union, both internally and
externally. Not surprisingly, it is also in 1993 when the European Council at
440 Address by Jacques Delors, President of the Commission, to the European Parliament on the occasion of the investiture debate of the new Commission, Strasbourg 10 February 1993, Official Journal of the European Communities, Supplement 1/93, p. 9. 441 Ibíd., p.11.
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Copenhaguen established a set of four criteria for eventual enlargements (completed
with a fifth requirement in 1995 in Madrid) including clear human rights and
democratic references442. The political environment induced the European Union to
become more aware of its international role beyond mere economic factors.
In 1999, the EU Parliament approved a Resolution on the EU standards for European
Enterprises operating in developing countries: towards a European Code of Conduct.
This document called on the Commission and the Council to keep working on corporate
responsibility in line with the work of other international organisations, particularly the
OECD and the ILO. Besides some classic initiatives from a European approach, such as
the creation of a “social label”443, this Resolution insisted on the need of monitoring
mechanisms, in order to ensure that Companies operating on behalf of the EU in third
Countries respect EU standards, at the risk of losing the adjudication of projects through
the European Development Fund or the Commission’s budget444. An explicit reference
is also made to future EU agreements with third countries, which should not forget
social and human rights issues, including investment agreements445. The Parliament
finally foresaw a European code of conduct to facilitate the standardisation of voluntary
good practices, with the help of an observatory on CSR eventually comprising of
complaints and coercive measures.
This control is very problematic when dealing with the international activity of
European transnational companies. A supplier of several European transnational
companies could be subject to different codes of conduct imposed by its clients, in such
a way that part of its commercial relations would be seen as “socially responsible” but
some others not, even in the case of the same product and the same production criteria.
This is why, even though many companies were already writing their own CSR reports,
generally centred on the environment, health or safety at work, only very few included
respect for human rights in general terms or child labour. The diversity of the data in
these reports showed the need of a wider consensus at an international level on the
contents of CSR, its structure and reliability. Furthermore, the complexity of corporate
442 A. BIONDI, P. EECKHOUT and S. RIPLEY (Eds.): EU Law after Lisbon, Oxford 2012, Oxford Univ. Press, p. 131. 443 EUROPEAN PARLIAMENT: “Resolution on EU standards for European enterprises operating in developing Countries: towards a European Code of Conduct”, [A4-508/98], Official Journal of the Europen Communities, C 104, Part II, 14 April 1999, pp. 180-184, para. 13 444 Ibíd., para. 23. 445 Ibíd., para. 25-27 and 30.
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structures, that is, the fluidity and confusion between EU-based parent companies and
their international operations in third countries, make this problem even more difficult.
On the other hand, all the documents on CSR emanating from EU institutions
acknowledge and assume the previous work of other international organisations, so that
there is no doubt on where the EU has found its inspiration. The most usual explicit
references are the United Nations Charter, the Universal Declaration of Human Rights,
the most prominent international human rights law, the 1977 ILO Tripartite Declaration
of Principles concerning Multinational Enterprises and Social Policy, the 1976 OECD
“Guidelines for Multinational Enterprises”, the 1998 ILO Declaration on Fundamental
Principles and Rights at Work, specific recommendations of FAO, WHO, World Bank
and other specialised agencies. After 2000/2001, further references will be made to
more recent guidelines and documents, in particular to the work of the SRSG John
Ruggie in the area of business and human rights.
In March 2000 we find the first explicit and important reference to CSR: the European
Council at Lisbon made “a special appeal to companies’ corporate sense of social
responsibility regarding best practices on lifelong learning, work organisation, equal
opportunities, social inclusion and sustainable development”446. In this way, the Council
highlighted the will to develop CSR by establishing good practices in areas such as
education, continuous training and social affairs, consistently with the notion of
sustainable human development, i.e., the fusion of sustainable growth and human rights.
This objective represented an important advancement and a challenge to the extent it
was aimed at facing future changes derived from globalisation and a knowledge-based
economy, all in line with European values and social conceptions. In this direction, it
was necessary to increase the investment in human capital and to combat social
exclusion in order to proceed to a real modernisation of the European social model. In
the same direction, it was acknowledged that human capital was the main asset of the
EU and this idea had to inspire any European policy including CSR aspects (at least,
indirectly). More concretely, it was proposed to significantly increase per capita
investment in human capital; to reduce by half before 2010 the number of citizens
between 18 and 24 years old with secondary education who do not receive any further
preparation; and to define new basic skills for continuous training, as well as the
446 We find up to eight references to private companies: Presidency Conclusions, Lisbon European Council, 23 and 24 March 2000, para. 39 (citation –emphasis added).
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promotion of private-public partnerships in the field of education447. In this sense, even
though the EU would act as a catalyst, the fundamental actions had to be undertaken by
the private sector (companies).
In the Commission’s Social Policy Agenda 2000448 a special mention was made to the
requirement of incorporating social responsibility as an active strategy to remediate the
negative consequences of globalisation and economic integration in the employment
market. For that purpose, the impulse of a coordinated CSR strategy in Europe had to go
through multi-stakeholder partnerships (NGO’s, CSO’s, companies, social public
authorities, etc.). The so-called “social partners” had a crucial role in the view of both
the Commission and the Council; it is our understanding that the level of institutional
engagement was still low, limited to the general promotion of these initiatives without
really launching concrete actions, even though it is necessary to point out that the social
aspects of the “European Union external relations” were reaffirmed, not only in
anticipation of enlargements but also in general terms with regard to third countries449.
During the Stockholm European Council, in March 2001, whose main target was full
employment, a variety of CSR related issues were considered, although indirectly. The
pre-crisis politics were centred on building a sustainable growth, wondering on which
way the European social model had to be updated so as to include new educational and
training skills, adapted to the information society and knowledge-based economy. In
this strategy, well-designed systems of social protection deserved being studied as
important productive factors: more but also better work, as already stated in the Lisbon
Council (2000), to improve working conditions, foster equal opportunities (gender
policies and persons with disabilities), facilitate continuous training, ensure safety at
work and reach a better balance between family life and career.
A specific heading on Corporate Social Responsibility was included, welcoming
business-lead initiatives and the already existing project of a Green Paper in this area450.
What is important to note is that, little by little, an external dimension was progressively
447 Ibíd., para. 26. 448 COM (2000) 379 final. 449 Presidency Conclusions, Nice European Council, 7-10 December 2010, Annex 1 (Social Agenda), title VI. 450 Presidency Conclusions, Stockholm European Council, 23-24 March 2001, para. 31
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added to CSR issues, consistent with more general development goals at an
international level.451
The European engagement to renovate economic and social policies received a powerful
impetus at the Gothenburg European Council (June 2001), when a general new strategy
for sustainable development was approved adding a new environmental approach to
some of the previous agreements, particularly relevant to complete the Lisbon strategy
for CSR. We still don’t always find explicit references to CSR but the bases were
settled to build its further development. It was recognised that all economic, social and
environmental policies had to be implemented taking into account their social effects
and interactions, in order to design a comprehensive and holistic approach to coordinate
institutional initiatives towards sustainable development. Since Gothenburg,
considerations on the “social impacts” had to be introduced into the Common
Agricultural Policy, the Fisheries Policy, the Integrated Product Policy (“in cooperation
with business”, especially to improve waste management)452, what established a
precedent to potentially mainstream CSR issues into any European policy.
On a more general note, the Council also made some significant political statements,
saying for example that “[s] ustainable development –to meet the needs of the present
generation without compromising those of future generations- is a fundamental
objective under the Treaties”453, providing us with a definition at the same time it
informs us on which direction is evolving the approach to social responsibility linked to
more global and general goals. To confirm it, the Council expressed its engagement
towards reaching an agreement at the then forthcoming Doha Round, which indeed
ended up inserting into the WTO practices a more friendly attitude towards
development, taking into account the ever since undeniable importance of the social
dimensions of globalisation454. However, Doha would block the WTO for a decade.
At this point, we start to realise that the emergence of CSR in the EU has two main
characteristics: it initially follows the initiatives taken by other international
organisations, assuming this global work without additions. CSR receives of course
451 O. AMAO: Corporate Social Responsibility, Human Rights and the Law. Multinational corporations in developing countries, New York 2011, Routledge Ed., pp. 207-215. 452 Presidency Conclusions, Gothenburg European Council, 15-16 June 2001, para. 31. 453 Even though the Council didn’t specify on which articles of the Treaties this statement could find support. Ibíd., para. 19. 454 Ibíd., para. 26 and 45.
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some institutional support through the documentation cited above, but its content
heavily relies on private and voluntary initiatives, who may take over. As it has
happened in many fields of the European integration, the society takes the baton and
runs with it in parallel to slower and highly bureaucratised EU institutions. Later, back
to the institutional level, whilst CSR is gradually consolidated, the EU has made an
interesting contribution that we start to witness since year 2000: to strengthen the global
dimension of CSR, its potential in terms of sustainable human development through
cooperation and development policies, and even through trade or investment contracts
(in the case of the Parliament resolutions, usually more audacious than the Council or
the Commission).
This very important international or external dimension of CSR is again confirmed at
the Gothenburg Council. Part of the agreement stated that sustainable development had
to be included in cooperation programs, aimed at extending this practice to other
international organisations. The European Union was assuming this way its
international role, perhaps even a desire for leadership, to promote an adequate
protection of the environment and a consistent commercial policy. There were four
concrete areas on which the Council put emphasis: climate change, natural resources,
transport and public health.
At this first stage of CSR in the EU (before 2009), apart from the practice of the
Parliament and the Council, the Commission was also working in this field and made
two main contributions: the Green Paper promoting a European framework for CSR
(2001)455 as well as the famous 2002’ Communication456, when CSR received proper
consideration by itself as a new crosscutting strategy in the EU.
The Green Paper was aimed at creating a general frame for companies and all eventual
stakeholders, in line with the sustainable development agenda settled at Gothenburg and
with a view to avoiding the potential adverse effects of European integration and
globalisation trends in the economy and labour markets. The Commission insisted on
the fact that corporate contribution must be understood as going beyond the existing
legal obligations, so that CSR is not a substitute for legal constraints, but a complement
455 COM (2001) 366 Final, 18 July 2001, Green Paper promoting a European framework for Corporate Social Responsibility. 456 COM (2002) 347 Final, of 2 July 2002, Corporate Social Responsibility: a business contribution to sustainable development.
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to boost development consistently with both general human rights compliance and the
European social agenda. According to the Commission, it was crucial to work on a
double direction: to involve all stakeholders and as many CSO’s / NGO’s as possible,
and secondly to extend these initiatives also to SME’s, which actually constitute the
majority of the productive and business sector.
In a more concrete manner, the Green Paper includes different engagements from an
intra-European point of view:
a) Concerning the management of human resources, the objective is to foster and
maintain qualified workers thanks to continuous education and training, equal
remuneration programs and better information on the companies themselves.
Non-discrimination responsible practices were encouraged so as to facilitate
labour opportunities to less qualified work force, less educated or elderly people,
sustained on training policies in close cooperation with local public authorities
in charge of education and professional programs.
b) As for public health and safety at work, this is to a great extent a pending subject
in the EU due to the expansion of subcontracting and outsourcing practices
making it difficult to apply CSR principles (or even prevent directly illegal
practices). We cannot forget that most of the historic improvements in labour
and social security law have been achieved through legal constraints. To
stimulate good practices in this area, we might propose quantifying its benefits
in the companies’ management and within marketing policies.
c) In regard to the environment, the main goals are the reduction of use of
resources, pollution and waste management. This field has experienced a
significant and prompt improvement because companies were primarily
interested in reducing the associated costs (power and raw materials),
compensated with efficient waste management and recycling processes, which
are in addition easily measurable in traditional accounting systems and Boards
of Directors’ reports.
From an institutional and international perspective, more relevant to us, the Commission
wants European enterprises to integrate CSR within their commercial and development
policies, extending its use to other international scenarios and contexts. Already
recognised obligations under international human rights law are not under discussion
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because of CSR recent developments. Companies have to be aware of this fact whether
they operate in Europe or in third countries even where human rights violations or
corruption might be usual. Although the EU had already given importance to the OECD
and ILO principles and norms, with the Green Paper a new commitment was expressed
trying to push forward standards and regain some leadership in its interaction with other
international organisations. As for CSR’s external dimension, networking plans were
fostered towards the creation of private partnerships in line with common guidelines, for
example, when looking for suppliers (supply chains easily become CSR “black holes”
as they become more and more complex and global). It is in the relationship with
customers where CSR has quite quickly developed (so-called “eco-friendly” products
and services); not that much when dealing with suppliers. The reason is that consumers’
awareness is higher and demand such responsibility while, at the same time, benefits for
companies and calculations are easily integrated in marketing plans457. In summary, the
remaining problems (up to now) are the same: credibility, standardisation, measurement
and information systems, monitoring and impact assessments (to detect the benefits for
both companies and society).
In this sense, the institutional role of the EU is potentially positive, if institutions dare
developing these ideas. As preconized by the EU Parliament report on the Green Paper,
it seems easy to call on the Council and the Commission to go one step further, starting
with the liability of EU parent companies operating abroad also within EU Courts458
(see Chapter IV, heading 2), or making CSR mainstream to any business and not only a
voluntary “extra add-on” taking into account the actual influence of many EU-based
transnational companies. The voluntary component of CSR would be the choice of the
concrete way to implement and select the particular focus of the company, but not the
fact of having a CSR policy. The most audacious institutional player in the emergence
of CSR in the EU has been the Parliament, but we need to balance all positions without
forgetting the importance of the external dimension of CSR. The need to improve
human rights respect in economically developing countries where EU-based companies
operate is crucial. At the same time, the internal dimension of CSR shouldn’t be
457 C. VALOR and I. HURTADO (Coords.): Las empresas españolas y la Responsabilidad Social Corporativa. La contribución a los Objetivos de Desarrollo del Milenio, Madrid 2009, Ed. Catarata, pp. 38-45. 458 The EU Parliament Report on the Green Paper took form of a Resolution on the Commission Green Paper on Promoting a European framework for Corporate Social Responsibility (COM(2001) 366 –c5-0161/2002-2002/2069(COS)), para. 50 (for the interpretation of the Brussels Convention and the extraterritorial liability of EU companies, analysed below –Chapter IV, Section 2).
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neglected in order to maintain and preserve human rights standards in economically
developed countries. The number of pending cases in ECHR suggests that Europe is not
necessarily a paradise; it could be said that the EU Parliament excessively focuses on
the external dimension459, even if we also need to put the above-cited Parliaments’
Report on the Green Paper in the context of pre-crisis politics and keep in mind that it
constitutes a perfectly legitimate and well-founded political desideratum. In any event,
the global approach of the Green Paper and the international concerns of the Parliament
don’t seem problematic, but useful to foster CSR through an early global approach460.
Finally, the Communication of the Commission issued in 2002461 importantly clarified
the European frame on CSR. The new strategy was designed specifically thinking of
private actors, in such a way that public authorities would only encourage it as a
complementary way to contribute to sustainable development (together with other
classic developmental policies). In summary, the proposal envisaged the following
developments:
a) The positive impact of CSR had to be disseminated, both inside and outside
Europe, to the extent most of the companies are still not able to quantify its
potential effect on productivity and neither consumers know to what extent it
can benefit them. To that end, the exchange of information and experiences
would be promoted between companies and Member States, especially within
the same economic sector, to reach a common understanding on core CSR
notions and to help the establishment of agreements that might reduce the initial
cost of introducing CSR codes. This is based on the recognition of a long-term
interest of companies, once the Commission realises that the Parliament was
right when saying that CSR was no longer an “add-on” but had become a
commonplace among corporations, despite the fact that its completely voluntary
adoption is still defended by the Commission.
b) A multilateral forum was proposed at a regional level to evaluate transparency
and convergence of CSR tools and practices.
c) Precisely for that reason, the Commission realised that an important work was
needed towards convergence and transparency in order to build a reliable and
459 J. LUX, S. SKADEGAARD THORSEN and A. MEISLING: “The European Initiatives”, in R. MULLERAT: op. cit., pp. 325-348, at p. 332. 460 F. BORGIA: op. cit., pp. 150-151. 461 COM (2002) 347 Final, 2 July 2002, on Corporate Social Responsibility: A Business contribution to Sustainable Development.
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credible system to really reflect –internally and externally- the benefits of CSR.
The EU could serve as intermediator and coordinator of these information
systems, moderating the debates to make the advancements effective.
d) CSR had to be integrated in all EU policies. This is an absolute novelty; it is true
that the Gothenburg European Council already provided the insertion of social
and environmental concerns in any European action, but the Commission took a
substantial step forward mentioning expressly CSR as such in any EU policy,
included the external action.
As can be seen so far, after the first impulse of the different European Councils cited
above, the inter-institutional dialogue has mainly taken place between the Commission
and the Parliament. The Green Paper and 2002’ Communication undoubtedly
constituted steps forward, but the Parliament issued a new report making some remarks
to the Commission. The debate on voluntariness was closed and the Parliament admitted
that CSR is necessarily voluntary, but the Parliament did not shy away from
“emphasis[ing] that companies should be required to contribute to a cleaner
environment by law rather than solely on a voluntary basis” 462, thus a bit frustrated with
an essential aspect of the definition of CSR. We have noted in the general part of this
work that CSR has evolved into a mix of hard and soft law, well beyond mere
voluntariness, but by 2003 the EU was still in its way to reach that conclusion. In any
case, the Parliament seemed to be satisfied in the overall with the Commissions’
approach, calling for an effective and quick implementation of the proposed measures,
in particular the eco and social labels, the launching of the multi-stakeholder forum, and
some new ideas such as a register of blacklisted companies463, sadly forgotten
afterwards. The Parliament’s report annexes the opinion of different Committees, of
which we might highlight the Industry, External Trade, Research and Energy which
demands a greater engagement within the WTO negotiations as well as launching a
Global Convention on Corporate Accountability464.
Before the entry into force of the Treaty of Lisbon in December 2009, we might say that
CSR emerged and started to consolidate at a European level. The following initiatives
didn’t add much to the previous corpus. Between 2005 and 2006, the Commission made
462 EUROPEAN PARLIAMENT: Report on the Communication from the Commission concerning Corporate Social Responsibility: A business contribution to Sustainable Development (COM(2002) 347 -2002/2261 INI), Final A5-0133/2003, 28 April 2003, para. 3. 463 Ibíd., p. 10, para. 29. 464 Ibíd., p.16, para. 9 and 12.
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some efforts to recover the spirit of the European Council at Lisbon. For example, a
new Communication in 2006 renewed the commitment with CSR, essentially repeating
the wording and priorities, but advancing in the international or external dimension of
CSR465, also tightly related to UN MDG’s and the work of the SGSR John Ruggie,
newly appointed in 2005466. Again, the Parliament’s response is centred on the
complementarity of compulsory and voluntary measures. The EP realises that the
proliferation of codes of conduct without clear guidelines and common criteria can
cause confusion, and that the European debate was stagnating and needed a “shift from
‘processes’ to ‘outcomes”467, without giving away any of the previous considerations on
the extraterritorial liability of EU-based companies as a complement to make CSR more
effective.
For those particularly sceptic on the potential of this work, even at this first stage before
the decisive impulse after 2009, all this soft law permeated for example, timidly but
clearly, in two Directives regarding the annual reporting of certain companies and
financial institutions, which included unprecedented references to social aspects. It is
said that “where appropriate, this should lead to an analysis of environmental and social
aspects necessary for an understanding of the company’s development, performance or
position”468 consistently with Recommendation 2001/453/EC. In 2006 a Directive of
the Commission reiterated this approach on “environmental and social aspects” and
further required (amending Directive 78/660/EEC) that Companies may provide in their
annual report with a corporate governance statement, disclosing the corporate
465 “The Commission recognises the linkages between the uptake of CSR in the EU and internationally, and believes that European companies should behave responsibly wherever they operate, in accordance with European values and internationally agreed norms and standards”, Communication from the Commission to the European Parliament, the Council and the European Economic and Social Committee: Implementing the Partnership for Growth and Jobs: making Europe a Pole of Excellence on Corporate Social Responsibility, COM (2006) 136 final, 22 March 2006, p. 5. 466 The appointment of John Ruggie took place in 2005 and is likely to be another reason why the Commission re-examines CSR trying to revitalise the efforts without much success between 2006 and 2009. 467 EUROPEAN PARLIAMENT: Report on corporate social responsibility: a new partnership (2006/2133 INI), Final A6-0471/2006, 22 December 2006, para 4. The main ideas of this Report were included in the Resolution of 13 March 2007 on corporate social responsibility, a new partnership (A6-0471/2006 / P6_TA-PROV(2007)0062). 468 Directive 2003/51/EC, 18 June 2003, on the annual and consolidated accounts of certain types of companies, banks, and other financial institutions and insurance undertakings, recital 9. This recital is consistent, within the same Directive, with article 1, item 14 (amending previous Directive 78/669/EEC) which states that “to the extent necessary for an understanding of the company’s development, performance or position, the analysis shall include both financial and, where appropriate, non-financial key performance indicators relevant to the particular business, including information relating to environmental and employee matters” (emphasis added).
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governance code to which they are subject, or the one to which they have voluntarily
adhered, as well as the “corporate governance practices applied beyond the
requirements under national law”, or in absence of all these, when “the company has
decided not to apply any provisions of a corporate governance code […], it shall explain
its reasons for doing so” (emphasis added)469. Despite the obvious interest of this early
permeation into hard law instruments, we share only to a limited extent the view of
many academics that are only interested in CSR in the EU because of its possible
compulsory character ad futuram470; even its voluntary elements can contribute to
complement legal obligations (provided these exist). We move somewhere between
“complying” and “explaining” requirements. Perhaps there is a lack of clarity in the
European corporate governance codes, and this initial regulation might be less
demanding than in the US471, but we should keep in mind it is a highly complex on-
going process in which the Commission understandably leaves more room for the
margin of appreciation of Member States.
From this documentation we infer that the inter-institutional feedbacks have vivified the
development of CSR in the EU. The terms of the debate between the Parliament and the
Commission confirms the early global vocation of CSR in the EU at the same time it
continued to be internally consolidated. In any case, social concerns and the potential of
corporate responsible practices had a rapid reflection in civil society organisations and
companies. The awareness on social and environmental impacts of the market economy
quickly spread and, after this first institutional push, we might hypothesize that –again
in the European history, private actors and civil society took over and has, for a long
time, been ahead of the institutional initiatives. A good part of the progress made
recently is thanks to the private initiative, particularly in social issues, environmental
protection and respect for human rights, trying to contribute to sustainable development
as indicated after Gothenburg, not only in Europe, but also in third countries in which
companies operate (mainly least developed countries).
469 This affects companies whose securities are admitted to trading on a regulated market and which have their registered office in the Community. Directive 2006/46/EC, 14 June 2006, on the anual accounts of certain types of companies, recital 10 and article 1, item 7. 470 B. HORRIGAN : Corporate Social Responsibility in the 21st Century. Debates, Models and Practices among Government, Law and Business, United Kingdom 2010, Edward Elgar Pub. Ltd., pp. 187-188. 471 B. SOLTANI and C. MAUPETIT : “Importance of core values of ethics, integrity and accountability in the European corporate governance codes”, in Journal of Management and Governance(Springer Ed.), May 2015, Vol. 19, Issue 2, , pp. 259-284, at pp. 273-280.
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In this first phase of emergence of CSR at a regional level, and despite the usual inter-
institutional battles and the lack of originality, the first European contribution is to have
strengthened its link with general human rights issues and global development goals,
while internally clarifying and progressively specifying its content. To sum up, the first
phase of emergence and definition of CSR in the EU did not incorporated new
components but interestingly evolved from a limited concern ad intra to a wider
development goal.
3.1.2. A new impulse after 2009
With the entry into force of the Treaty of Lisbon in December 2009 the debate on CSR
slightly changes. For instance, article 2 of the TEU clearly settles the “values” of the EU
in terms of democracy, rule of law, respect for human rights and justice. The global
dimension of CSR finds support in articles 21 and 205 of TFEU extending these values
to the Union’s external action. Particularly interesting is the accuracy and level of detail
of item 1 of art. 21 TFEU referred to the “universality and indivisibility of human rights
and fundamental freedoms”, assuming by the way, at a Treaty level, the evolution and
consolidated practice of international human rights law as we have studied previously.
After 2009 the Treaties’ provisions are therefore consistent with CSR conception under
which internal improvements have little sense if they are not accompanied by an
international dimension, according to the Union’s external commitment to “consolidate
and support democracy, the rule of law, human rights and the principles of international
law” (art. 21.2 TFEU). The mention to general international law is an open window, as
argued with regard to trade and investment agreements472, to introduce human rights as
a common interest of the international society. Besides, but not surprisingly, the general
provision on the EU external action (item 2 art. 21 TFEU) provides us with a list in
which we find both human rights and the promotion of economic development, if we
read these articles together with art. 3 TEU enshrining the European social vocation and
article 11 TFEU on the environment and sustainable development.
As explained, after a few years of relative stagnation (2006-2009) or without significant
news in this regard, one of the most interesting initiatives came in 2009 when the
472 See Chapter II, Section 2.
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European Commission launched a call for tenders to study ‘the legal framework with
respect to human rights and the environment applicable to European companies
operating outside the EU’, in order to know on what basis the work had to be done to
join Ruggie’s efforts and effectively advance in that direction.473 The result was the
Study of the Legal Framework on Human Rights and the Environment Applicable to
European Enterprises Operating outside the European Union, made by the University
of Edinburgh in 2010.474
It is also important to cite a second comprehensive study, entitled Responsible Supply
Chain Management Potential Success Factors and Challenges for Addressing
Prevailing Human Rights and Other CSR Issues in Supply Chains of EU-Based
Companies (2011)475, carried out under the EU Programme for Employment and Social
Solidarity (PROGRESS, 2007-2013). One of the differences after 2009 is that research
funds are allocated to CSR issues, perhaps nurturing endless theoretical discussions
without focusing enough on concrete outcomes, but also informing the institutions. Both
studies have a very technical and legal approach, devoting much space and interest to
binding aspects, but showing as well to a certain extent the interaction between soft and
hard law and the way they complement each other476.
Concreteness is precisely the spirit of the EU Parliament’s Report on corporate social
responsibility in international trade agreements, together with the Committee on
International Trade, issued in 2010477, where we find the proposal to incorporate CSR
into the generalised system of preferences, CSR clauses in all EU trade agreements (as
in the South Korean precedent), and make EU-based companies accountable for
eventual breaches of human rights or environmental hazards when they operate abroad
escaping European standards (again, according to a progressive interpretation of the
Brussels Convention). The appointment of John Ruggie and his main contribution, the
473 DO 2009/S 131, 11/07/2009. Call for Tenders ENTR/09/045 –Study of the legal framework on human rights and the environment applicable to European enterprises operating outside the EU. 474Available at : http://ec.europa.eu/enterprise/policies/sustainable-business/files/business-human-rights/101025_ec_study_final_report_en.pdf 475 This was a very comprehensive research including up to 12 case-studies. http//ec.europa.eu/enterprise/policies/sustainable-business/files/business-human-rights/final_rscm_report-11-04-12_en.pdf 476 The potential of soft law in the EU is studied below (see Chapter IV, Section 1). 477 EUROPEAN PARLIAMENT: Report on corporate social responsibility in international trade agreements (2009/2201(INI)), EP reference A7-0317/2010, 11 November 2010.
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UN Guiding Principles on Business and Human Rights (studied in the first part of this
work), also renewed the interest in this subject at a European level.
However, if the Parliament is always complaining and pushing for further
advancements, it sometimes sins of impatience, as shows the example of Regulation
(EC) 1221/2009 of 25 November 2009 on the voluntary participation by organisations
in a Community eco-management and audit scheme (EMAS). EMAS was an important
new tool in the area of environmental impacts, which constitutes a kind of voluntary
collective self-control system with an institutional supervision including, basically, the
obligation to provide sound information. By way of little criticism, we shall recall that
the environmental protection in the EU and in International Law is in advance, so that
such a mechanism –being a sign of hope– is still not likely to exist in other sectors.
2009 is also a turning point as the 2007/2008 financial crisis, converted into a public
debt crisis and finally a full economic crisis for more than five years, also raised the
awareness on the human rights and social risks of globalisation following to the de-
regulatory enthusiasms since 1991. Europe 2020 Strategy reflects this situation, being
EU institutions seriously concerned by the speed with which the recent economic
growth was being reversed, the rising unemployment (becoming structural) and the lack
of demographic relieve and the impotence of the financial sector. In essence, it seemed
clear that recovery had two pillars: growth, certainly, but also social relieve (even
though the structural reforms promoted by the Troika were initially centred on the
alleviation of the debt crisis leaving aside many social concerns). Anyway, the fact is
that the EU 2020 Strategy is peppered with social issues and the Commission declares
its commitment towards a new updated approach to CSR, considered a “key element” to
ensure a durable recovery, in addition to go on extending CSR codes and practices
among businesses478.
This statement of intent is singularly translated into the Renewed EU Strategy 2011-14
for CSR. First of all, the three-fold analysis proposed by Ruggie has been accepted in
the EU, that is, the UN three level framework (to “protect, respect and remedy”) is read
as “identifying, preventing and mitigating” in this new approach to CSR: obvious is the
State duty to protect, as the corporate duty to respect, and the need of effective
478 COM (2010) 2020, 3 March 2010, Europe 2020. A strategy for smart, sustainable and inclusive growth, pp. 15-16.
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remediation mechanisms (judicial or non-judicial). CSR is founded on this basic
understanding, but is no limited to that as it goes beyond.
The Renewed EU Strategy for 2011-14 gives us a new definition of CSR: it is no longer
the voluntary incorporation of social concerns in the business activity, but directly the
“responsibility of enterprises for their impacts on society”479, underpinning all Europe
2020 objectives, always respecting the international frame where the Commission adds
references to the latest instruments (the UN Guiding Principles and the Global
Compact). Moreover and not less important, there is a shift in the wording: it is no
longer a ‘framework’, but a ‘strategy’, including self and co-regulation procedures,
consultation to all businesses (extended to SME’s), shareholders, stakeholders (mainly
CSO’s and NGO’s) aimed at launching a specific agenda for action. Finally, it is our
understanding that the Commission was not wrong when giving such a crucial role to
information on CSR and reporting measures to serve as solid foundations to continue
working.
3.2. CSR: mainstreaming EU Policies
The Commission released in March 2014 an implementation table480 that needs to be
clarified and updated, partly thanks to a more recent Staff Working Document481. The
table identifies up to eight areas in which the CSR agenda is being implemented:
enhancing visibility and disseminating good practices; improving and tracking trust in
business; improving self and co-regulation processes; enhancing market reward
(through public procurement reforms, consumption patterns and investments);
disclosure of social and environmental information; CSR in training and education;
national and sub-national CSR policies; and a better aligning of EU and global
approaches (principles, guidelines, other international organisations and third countries).
479 COM (2011) 671 Final, 25 October 2011: A Renewed EU Strategy 2011-14 for Corporate Social Responsibility, p. 6 (para. 3.1). Available at http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=COM:20110681:FIN:EN:PDF 480 Not an official document. Accessible at http://ec.europa.eu/growth/industry/corporate-social-responsibility/index_en.htm (PDF link “detailed table showing progress in the implementation of this agenda”). 481 SWD (2015) 144 Final, 14 July 2015, on Implementing the UN Guiding Principles on Business and Human Rights –State of Play.
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Instead of using the categories chosen by the Commission to present the different
initiatives undertaken so far, we rather propose a functional criterion to divide them into
three different items: a) information on CSR and its promotion; b) institutional and
international initiatives; and c) actions with an eventual or already effective impact on
EU Law. Without obviously undervaluing the first two areas of action, we will pay a
greater attention to the latter, as it will indicate the extent to which CSR should be taken
seriously, even by sceptics. We will first analyse the informative and promotion actions,
followed by the institutional and international approaches, before considering the legal
spill-overs, in order to put some order into widely dispersed initiatives.
Is CSR a new policy in the EU? The following analysis shows, on the one hand, that
CSR has emerged as a strong crosscutting concern and, in this sense it would deserve to
be considered as a new policy in its own right, especially after 2009. On the other hand,
more than a policy as such, the wide dispersion and sometimes disconnection between
the different actions suggest that it has become a new governance tool that has emerged,
meant to mainstream almost any EU policy, hailing from development and cooperation
programmes to commercial policies, public procurement regulation, company law or
trade and investments.
The CSR precedents might confirm this definition as a mainstreaming governance tool
rather than a policy per se, since CSR issues can be traced back even before it received
that name and was properly labelled, starting with three basic origins: the environment
and work and consumers’ policies. EU institutions have “long been renowned for their
“implicit CSR” much before the concept of CSR was even discussed in an explicit
manner”482. There is no difficulty in making emerge CSR when it comes to consumer’s
protection: suffice it to say that, as early as 1984 a Council Directive addressed
misleading advertising,483 which later has become a typical CSR related issue,
combining hard regulations and the industry self-control under the name of unfair
commercial practices484. An unlabelled and implicit CSR can easily be traced in a
number of early directives concerning the environment and related issues, even public
contracts, comprising reporting requirements, public disclosure and access to
482 M. A. CAMILLERI: “Environmental, social and governance disclosures in Europe”, in Sustainability Accounting, Management and Policy Journal, Vol. 6 (2015) No. 2, pp. 224-242, at p. 226. 483 COUNCIL Directive 84/450/EEC, of 10 September 1984, relating to the approximation of the laws, regulations and administrative provisions of the Member States concerning misleading advertising. 484 COM (2013) 138 Final, 14 March 2013, on the application of the Unfair Commercial Practices Directive. Achieving a high level of consumer protection. Building Trust in the Internal Market.
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information, due diligence measures and previous impact assessments485. More recently,
the common agricultural policy, the fisheries policy and transport policy have also
implicitly incorporated this approach in their actions and objectives. As an example we
could cite the increasing importance given to the safety of food and to protection of the
environment in the CAP and its slow but constant liberalisation. In addition, we will
have to pay special attention to the environmental policy, the development cooperation
policy, the commercial policy and the neighbourhood policy. In summary, the wide
dispersion of the initiatives on CSR and, ultimately, the relative “confusion is perhaps
due to the fact that the EU did not wait for the advent of CSR to deal with diligence
obligations of organisations or companies with regard to their environmental, social or
societal responsibility”486.
Whether a new policy or a transversal governance tool, the fact is that the Commission
has turned CSR into a new instrument to go on fostering the integration of the internal
market, convergence and transparency, mainstreaming many policies in line with
sustainable development and human rights goals as a general interest of the
international society (and, as explained elsewhere in this work, a priority confirmed
with the Treaty of Lisbon).
3.2.1. Implementation of the CSR agenda: information and promotion
After 2009, the EU rightly realised that any effort to foster CSR had an inescapable
starting point: information and promotion. Sound information, dissemination of good
practices and exchange of experiences are the three pillars of an active publicity, which
sometimes includes reporting mechanisms. Obtaining and disseminating information
485 For example, in Directive 92/43/EEC on the conservation of natural habitats and of wild fauna and flora, Directive 94/62/EC on packaging and packaging waste, Directive 2001/42/EC of the European Parliament and the Council on the assessment of the effect of certain plans and programmes on the environment, Directive 2003/87/EC of the European Parliament and of the Council establishing a scheme for greenhouse gas emissions allowance trading within the Community and amending Council Directive 96/61/EC, Directive 2004/35/EC of the European Parliament and of the Council on environmental liability with regard to the prevention and remedying of environmental damage, and Directive 2008/98/EC on waste or Directive 2011/92/EU on the assessment of the effects of certain public and private projects on the environment. The European Parliament has already shown the CSR-related aspects of the aforementioned directives as a precedent: EUROPEAN PARLIAMENT –Directorate General for Internal Policies: Corporate Social Responsibility. Identifying what initiatives and instruments at EU level could enhance legal certainty in the field of corporate social responsibility, PE462.464, 2012, pp.43-52. 486 Ibíd., p. 43.
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(through reports, working papers, surveys and studies) is an essential step to promote
CSR.
The Commission has focused on obtaining the best available information on CSR in
order to disseminate and promote good practices. The informative and institutional
efforts of the Commission are then tightly related to the promotion of CSR. The
philosophy could be simply summarised in a sentence: before assessing the state of play
we need to know the playing field.
A comprehensive Eurobarometer survey on CSR, undertaken in 2013487, showed that
local businesses and SME’s apparently do a better job than large companies. Moreover,
in the context of the crisis, 39 % of the 32,000 respondents consider that companies do
not take seriously their impact on society whereas almost exactly the same proportion of
respondents (40%) thinks the opposite. Citizen’s view on CSR is positive in the overall,
as it is said to contribute to get out of the crisis, even though the crisis would erode it
and discrimination in employment remains a concern in public opinion488.
More interestingly, the extent to which the work of the EU and other international
organisations has permeated business practice seems still low. A study on 200 randomly
selected large companies reveals openly improvable results489. Even if 68% of
companies refer to CSR (or similar definitions) and 40% cite at least one internationally
recognised CSR instrument, the sample indicates two major limitations: first of all, a
very shy third of the sampled companies comply with the Commission’s request to refer
to at least one of the main instruments (the UN Global Compact, OECD Guidelines for
Multinational Enterprises or ISO 26000); but secondly, only five companies (2’5 % of
the sample) do cite the UN Guiding Principles on Business and Human Rights, very
illustrative percentage that shows the lack of a consolidated human rights approach to
CSR, to overcome the strong inertia to consider it a mere marketing strategy.
Besides, in contradiction with citizens’ perception shown by the above-cited
Eurobarometer (more doubtful about the engagement of larger companies), according to
487 EUROPEAN COMMISSION: Flash Eurobarometer 363. How Companies Influence our Society: Citizen’s View, Report, Brussels (April 2013), 134 pp., passim. Available at: http://tinyurl.com/q4a2mt7 488 EUROPEAN COMMISSION: Flash Eurobarometer 393. Discrimination in the EU in 2012, Report. Brussels (November 2012), 238 pp. Available at: http://tinyurl.com/bv2zpqc 489 EUROPEAN COMMISSION: An Analysis of Policy References made by large EU Companies to Internationally Recognised CSR Guidelines and Principles, Brussels (March 2013), 19 pp., at pp. 6-7 (for the data discussed).
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this study on 200 enterprises it seems that those over 10,000 employees would
paradoxically be three times more likely to refer to different international standards, in
comparison with smaller companies (between 1,000 and 10,000 employees). The
Commission interpreted that smaller companies needed a particular guidance and has
issued a number of documents addressed at SME’s in 2013, that range from the
handbook “My Business and Human Rights” (very correctly emphasizing the centrality
of human rights in CSR490), to the publication of a six pages study of five SME’s –of
questionable usefulness- entitled “De-mystify Human Rights for Small and Medium-
sized Enterprises”.
Without contesting the importance of fostering CSR amongst SME’s, which constitute
the majority of EU’s business fabric491, we do not consider it a problem of
“mystification”. The Commission’s focus on SME’s is right, but the statistics showing
their apparently lower level of engagement might have in fact a different origin,
especially if citizen’s perception is the opposite. A simpler explanation should take into
consideration the logically lower accounting requirements for SME’s and their reduced
communication strategies, what does not necessarily mean that SME’s are actually less
committed or socially responsible at a local or community level492; bigger companies
are usually keener and much more interested in communicating their CSR thanks to
structured media and information departments. In 2014 the EC finally noticed this
“fallacy” 493.
The informative and promotion strategy in the form of studies and reports is, in many
cases, the output of networking events organised by the Commission, who has the
capacity-building know-how and the institutional structure to make them possible. For 490 EUROPEAN COMMISSION: My Business and Human Rights. A guide to human rights for small and medium-sized enterprises, Brussels (March 2013), 28 pp. 491 According to the latest available data of 2013/2014, 99’8% of all companies in the EU are SME’s, responsible for the 66’9% of employment, while large companies constitute 0’2% and employ 33’1 % of the active population. In terms of total value added at factor costs in the EU, SME’s are 16’2 percentage points above large companies. EUROPEAN COMMISSION: A partial and fragile recovery. Annual report on European SME’s 2013/2014, Brussels (July 2014), p. 15. 492 C.D. DITLEV-SIMONSEN, H. von WELTZIEN HOIVIK and O. IHLEN: “The historical development of Corporate Social Responsibility in Norway”, in S.O. IDOWWU, R. SCHMIDETER and M.S. FIFKA (Eds.): Corporate Social Responsibility in Europe. United in Sustainable Diversity, Switzerland 2015, Springer Ed., pp. 177-196, at pp. 190-191. 493 “At the same time it must be noted that it is a fallacy to assume that SME’s and micro-companies necessarily have a lower awareness of CSR issues. With their close ties to their local communities such small businesses often have a heightened awareness of their social responsibility in the local context, whether or not any initiatives taken are officially labelled as CSR or not”. EUROPEAN COMMISSION: Corporate Social Responsibility. National Public Policies in the European Union, Compendium 2014, Brussels 2014, p. 14.
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example, still on the subject of SME’s, a handbook for advisers was published in 2013
after a meeting held 11-12 June 2012 attended by 100 advisers494.
We can observe that meetings with stakeholders, CSO’s and experts usually lead to the
publication of studies. A good example is the report “Helping consumers make informed
green choices and ensuring a level playing field for business”, which was the result of a
multi-stakeholder dialogue presented at the European Consumer Summit in March
2013. It gave us some clues on the evolving Commission’s opinion on unfair
commercial practices in relation to environmental standards: the so-called “green-
washing”, misleading advertising, the reliability of eco-labels and the self- and co-
regulation problems. Also under the initiative of the DG SANCO (Health and
Consumers), there is work in process to extend the range of products covered by these
studies, such as non-food products, second hand cars, electricity or children and the
internet, always through several multi-stakeholders dialogues on environmental claims
that may delay their publication.
In a different area, meetings have also been very frequent with “CSR Europe”, one of
the most prominent business-lead organisation in the EU with 70 corporate members
and 41 national CSR organisations495, leader of the private programme Enterprise 2020
aimed at completing the Europe 2020 Strategy with the point of view of entrepreneurs
after two meetings with Commission’s representatives in September and November
2012, to be added to its participation in the numerous multi-stakeholders dialogues
organised in Brussels. Also important, but for the moment less active in the EU, is
UNPRI496, an investors’ initiative on Socially Responsible Investments (SRI’s) in
partnership with the UNEP Financial Initiative and the UN Global Compact, who is
more and more involved in negotiations and dialogues with the Commission.
Networking events have covered a variety of matters, like the CSR dimension of youth
and employment497 or active ageing and mental health at workplace. In cooperation with
494 EUROPEAN COMMISSION: Tips and Tricks for Advisors. Corporate Social Responsibility for Small and Medium-Sized Enterprises, Brussels 2013, 31 pp. 495 European Business Network for Corporate Social Responsibility: see www.csreurope.org Even though it is a frequent interlocutor of the Commission, shall we recall that its 70 corporate member represent a very small proportion of all EU companies according (see footnote 97). 496 This private initiative has, at the date of closing this thesis, 286 asset owners, 911 investment managers and 193 professional service partners among its signatories. However, we shall bear in mind that this still constitutes a small proportion of all EU Companies. See www.unpri.org 497 Seminar on Youth, Entrepreneurship, volunteering and CSR, organised in September 2012. Other examples related to youth is the Partnership 2020 within the “Youth in Action Programme”, which also
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“CSR Europe”, the Healthy Aging Conference led to a 20 pages study completed in
May 2013 and co-funded by the Commission, and –interestingly enough– it warns that
the environmental concerns need to be completed with labour issues in CSR policies498.
We have already noted that the environmental protection has traditionally been ahead
with respect to general human rights and CSR; nevertheless, we have to keep in mind
the risk that the environment monopolise CSR, which is evidently a quite wider field.
Apart from statistics, surveys and short studies following to these networking events or
experts’ meetings, the Commission further allocates funds for research to obtain more
rigorous information upon which it can build a more credible promotion of CSR. We
have already cited, because of their prominence, the Study of the Legal Framework on
Human Rights and the Environment Applicable to European Enterprises Operating
outside the European Union, made by the University of Edinburgh in 2010499 and the
study on Responsible Supply Chain Management Potential Success Factors and
Challenges for Addressing Prevailing Human Rights and Other CSR Issues in Supply
Chains of EU-Based Companies (2011)500, carried out under the EU Programme for
Employment and Social Solidarity (PROGRESS, 2007-2013).
Other co-funded research projects have a more practical vocation, such as the European
Apparel and Textile Confederation and Industry-All (a European Trade Union) tool to
assist SME’s and, in general, the textile industry when operating abroad: it consists of
country-by-country assessments, including mathematic and qualitative factors inspired
on the ISO 26000, to inform on the main human rights risks for the textile industry,
particularly chemicals and pollution. After a period of refinement, it is aimed to be
made available as an online tool at the end of 2016501. Also very pragmatic was the
includes the project “CSR in Europe: Prince, Merchant and Citizen as one”. The latter consisted of a 17 months project to disseminate CSR among youngsters: it finalised in 2013, was adjudicated to several organisations and CSO’s with experience in youth issues, comprising workshops, seminars, courses that took place in Italy, Poland, Turkey and Portugal, all financed by the Commission. 498 We refer to the SWOT Analysis Report “Joint Action on Mental Health and Well-Being. Mental Health at the Workplace”, 20 pp, at p. 16. Available at: www.mentalhealthandwellbeing.eu 499 Available at : http://ec.europa.eu/enterprise/policies/sustainable-business/files/business-human-rights/101025_ec_study_final_report_en.pdf 500 This was a very comprehensive research including up to 12 case-studies. http//ec.europa.eu/enterprise/policies/sustainable-business/files/business-human-rights/final_rscm_report-11-04-12_en.pdf 501 SWD (2015) 144 Final, 14 July 2015, on Implementing the UN Guiding Principles on Business and Human Rights –State of Play, p. 12.
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approach of a more general project, financed under the Seventh Framework Programme,
to assess the impact of CSR, in quantitative and qualitative terms502.
Further resources have been allocated to the European Multistakeholder Platforms on
Corporate Social Responsibility in relevant business sectors, which have been
adjudicated for instance in the fruit juice, machine tools and social housing sectors,
besides a specific DG Connect platform called “ICT4Society” to coordinate CSR issues
in the ICT.
Other sectors have also been covered: to foster the so-called “socially responsible
investments” (SRI’s) the Commission co-funded with the UN Global Compact and
UNEP, a capacity building project on the integration of non-financial information into
investment decisions, lastly published in February 2013 by UNPRI –a private investors
initiative on SRI’s503.
Finally, the Commission commissioned the publication of three sector-specific
guidelines: on employment and recruitment agencies, information and communication
technology and oil/gas companies, to better inform on the implementation of the UN
Guiding Principles adapted to the particularities of these types of companies, always
after large consultations504. Even if there is no innovative approach and the EU keeps on
recognising the leadership of the UN principles and guidelines, the contribution again is
its unwavering human rights approach and its dissemination and promotion efforts.
Networking meetings and conferences, co-funding research projects and their output in
the form of reports, in sum, reliable information, is the very cornerstone of the EU’s
promotion strategy of CSR. As we have seen, the Commission has played a leading
role, culminated with the organisation of the first “CSR Awards” in 2013, to round off
this informative and promotion work, while raising its visibility.
502 See www.csr-impact.eu. Unfortunately, apart from general information, the website has been emptied once finalised the project so that there is no public access to documents and conclusions. 503 Principles for Responsible Investment Initiative –ESG Integration Working Group: Integrated Analysis. How investors are addressing environmental, social and governance factors in fundamental equity valuation, 27 pp. Available at: http://tinyurl.com/pgqbdds 504 Shift and the Institute for Human Rights and Business were commissioned to write all three guidelines cited: EUROPEAN COMMISSION: Oil and Gas Sector Guide on Implementing the UN Guiding Principles on Business and Human Rights, Brussels (June 2013), 91 pp.; Id.: Employment and Recruitment Agencies. Sector Guide on Implementing the UN Guiding Principles on Business and Human Rights, Brussels (June 2013), 96 pp.; and Id.: ICT Sector Guide on Implementing the UN Guiding Principles on Business and Human Rights, Brussels (June 2013), 98 pp. All three are available for free at http://bookshop.europa.eu.
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3.2.2. Implementation of the CSR agenda: international and institutional aspects
The information and promotion initiatives are further articulated by an institutional
commitment outside the EU, confirming the global and developmental dimension of
CSR after 2009. No need to repeat the institutional willingness ad intra, behind all
consultations and initiatives studied in the previous section (informative and promotion
strategies), to which we shall only add, because of its institutional importance ad extra,
the creation of the Council Working Group on Human Rights (COHOM) to monitor the
Action Plan on Human Rights and Democracy (2012-2014), principally addressed to the
EU institutions themselves and Member States, annexed to the more general EU
Strategic Framework on Human Rights and Democracy adopted in June 2012. The main
task of COHOM is to coordinate and ensure the consistency between the external and
internal actions of the EU, carrying out an important bilateral and multilateral work but
also, inside the EU, encouraging Member States to adopt national action plans.
Everything suggests that human rights will continue to mainstream, more or less
effectively, the institutional work of the EU and, obviously, with regard to business and
human rights in its external relations505.
From a formal and political perspective, business and human rights have been fully
incorporated into the agenda of the EU Special Representative for Human Rights in
bilateral meetings, particularly with Latin America (Mexico, Brazil, Peru, Colombia and
Ecuador), Asia (China and Indonesia) and Africa (especially South Africa). In the EU
relations with third countries, it is worth citing the EU-US Human Rights Dialogue in
2012, which considered the implementation of the UNGP’s. The EU has similarly
addressed CSR in the first meeting of the EU-Korea Committee on Trade and
Sustainable Development, or on the occasion of other bilateral meetings, such as the
EC-Turkey sub-committee on Industry and Trade and the EU-Chile Association
Committee meetings.
It is worth stopping a moment at the EU-Chile Association Agreement, which states that
“The Parties remind their multinational enterprises of their recommendation to observe
505 JOIN (2015) 16 Final.
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the OECD Guidelines for Multinational Enterprises”506. Despite its inclusion as a
political declaration of difficult enforcement507, annexed to the Agreement itself, its
significance is undeniable in the consolidation of a corpus of soft international norms.
In any case, most of the literature passes over the fact that the Agreement itself includes
a clear reference to CSR, even if it does not use this term, but a circumlocution when
art. 18 c) mentions “transparency, good regulatory practices and the promotion of
quality standards for products and business practices”, apart from more typical explicit
human rights references in articles 1, 12, 16 and 44. Article 44 is particularly
noteworthy, since it covers social cooperation with elements that are now considered
part of the definition of CSR508.
Bilaterally speaking, trade and development are now intertwined in the EU negotiations.
The trade and development policies, highly bureaucratised, have suffered some changes
in the same direction, i.e., including unprecedented dialogues and strategies with third
countries, with which CSR is being consolidated as a recurrent item on the agenda. The
European Instrument for Democracy and Human Rights included in its 2012 and 2013
Action Plans the promotion of trade unions and social dialogues in third countries. It is
since 2012 that the Commission issued a Communication in which it started to take into
account CSR and private actors in the development and trade policies to stimulate
responsible business practices509. The Council’s reaction to the Commission’s
Communication was very prompt agreeing with the “crucial role of the private sector”
and the importance of “partnerships between the private and public sectors” and
“dialogue with civil society”, therefore supporting the inclusion of innovative green and
506 EUROPEAN COMMUNITY: “Agreement Establishing and Association between the European Community and its Member States, of the one part, and the Republic of Chile, of the other part. Final Act. Joint Declaration concerning Guidelines to Investors”, Official Journal of the European Communities, L. 352, 30 December 2002, p. 3. 507 A. BONFANTI: Impresse Multinazionali, diritti umani e ambiente: profili di diritto internazionale pubblico e privato, Milano 2012, Giuffrè Ed., pp. 108-109. 508 Art. 44 of the Agreement prioritises “vulnerable and marginalised social sectors”, “women”, “working conditions, social welfare and employment security”, SME’s, “social and environmental vulnerability[ies]”, “social dialogue” and “human rights”. Article 45 specifically addresses gender equality. 509 “Corporate social responsibility also plays an increasing role at the international level as companies can contribute to inclusive and sustainable growth by taking more account of the human rights, social and environmental impact of their activities. We encourage companies to sign up to the internationally recognised guidelines and principles in this area […]. We also include provisions in our agreements to promote responsible business conduct by investors”. COM (2012) 22 Final, 27 January 2012, Trade, Growth and Development. Tailoring trade and investment policy for those countries most in need, p. 14.
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social criteria in trade and development policies as part of the EU’s external action510.
The Council reiterated the same idea just a few months later and, if there was any doubt,
it explicitly mentioned the promotion of CSR511.
In this context, the Commission’s new modus operandi in development policies has
definitely incorporated CSR amongst the conditions to be taken into account when
negotiating an agreement, thus institutionally fostering CSR expansion beyond the
EU512. In the EU relations with third States, we note the increasing importance of
ratifying international human rights instruments, labour and environmental standards,
fight against corruption, besides the promotion of CSR programmes in these partner
countries, “encouraging public-private policy dialogues […] to try to increase
willingness among governments and local authorities to engage in open discussions
with private sector representatives”513, with a particular focus on disadvantaged groups.
A practical and relatively successful example is the SWITCH-Asia Programme towards
sustainable production and consumption patterns, especially addressed at SME’s to
extend good practices and codes of conduct, besides institutionalising the EU-Asia and
intra-Asian cooperation. This model has been copied to other regions without the same
success for instance (SWITCH-Africa Green, SWITCH-MED for Mediterranean
countries, a middle-east partnership with EAP-Green). Their main contribution is the
acknowledgement that changes need to be stimulated also in the demand sector
(consumers), to render more attractive the productive efforts to comply with CSR
510 COUNCIL OF THE EU: Council conclusions. EU’s approach to trade, growth and development in the next decade, 3154th Foreign Affairs Meeting, Brussels, 16 March 2012, para. 16, 22 and 26. (Citation para. 16) 511 “The private sector and trade development are important drivers for development. An enabling business environment and more effective ways of leveraging private sector participation and resources in partner countries as well as increased regional integration, aid for trade and research and innovation will be key to the development of a competitive private sector. This has to go along with promoting labour rights, decent work and corporate social responsibility”. COUNCIL OF THE EU: Council Conclusions. Increasing the impact of EU Development Policy: an Agenda for Change, Brussels, 14 May 2012, Council Doc. 9369/12, para. 9. Similarly, but less explicit: COUNCIL OF THE EU: Council Conclusions. Social Protection in European Union Development Cooperation, 3192st Foreign Affairs Meeting, Luxembourg, 15 October 2012, para. 4. 512 “Adherence to social, environmental and fiscal standards is also considered a precondition for any EU engagement with, or public support to, the private sector”. COM (2014) 263, 13 May 2014, A Stronger Role of the Private Sector in Achieving Inclusive and Sustainable Growth in Developing Countries, p. 12. In the same page, Action 10 proposed by the Commission specifically refers to CSR: “Promote international CSR guidelines and principles through policy dialogue and development cooperation with partner countries, and enhance market reward for CSR in public procurement and through promotion of sustainable consumption and production”. 513 Ibíd., p. 14.
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standards, so promoting market rewards for CSR-friendly companies while
consolidating civil society and human rights awareness in developing countries.
In parallel, the European Investment Bank, a major international investor in
development, has updated its Environmental and Social Handbook by the end of 2013
to integrate the UNGP’s among the standards to be considered when making investment
decisions514.
In addition to the EU relations with third States, there is an utterly important multilateral
dimension of this institutional and international work on CSR, remarkably intertwining
trade, development and human rights.
At the level of other regional integration organisations, we could start citing the EU-
African Union (AU) Human Rights Dialogue held in November 2013, a specific EU-
AU Business and Human Rights conference was scheduled for September 2014, taking
advantage of the already organised UN Conference on the same issue in Addis Ababa.
As for the European role in Africa we shall highlight the importance of a shift in
language to overcome allegations of paternalism, fair or not, and the traditional scheme
of conditionalities, which is in part behind the fact that many African countries have
turned their attention to China and other new partners. China’s investments are not
subject to the stricter European standards515; we consider that a wider debate and
dialogue on “business and human rights”, making it clear that they are compatible, can
soften these relations and improve and revitalise the European role in the African
continent (without rejecting basic conditions and similar formulas for EU aid or
investments). 514 The Commission holds 30% of EIB shares, which is “the largest supranational borrower and lender in the world with an annual investment volume of ca. €7 billion per year and the biggest international investor in development policy”. EUROPEAN COMMISSION: Implementing the UN Guiding Principles on Business and Human Rights –State of Play, SWD (2015) 144 Final, 14 July 2015, p. 14. The EIB environmental and social handbook is available at http://www.eib.org/infocentre/publications/all/environmental-and-social-practices-handbook.htm 515 A good summary of the key-ideas that have governed China’s foreign trade and investment policies since the 1990’s at: I. TAYLOR: “China’s Foreign Policy towards Africa in the 1990s”, in The Journal of Modern African Studies, Vol. 36 No. 3, September 1998, pp. 443-460. On a general note, the following study is also very informative: G. SEGAL: “China and Africa”, in Annals of the American Academy of Political and Social Science, January 1992, Vol. 519 No 1 (January 1992), pp. 115-126. There are, besides, many case-studies that confirm this ambiguous role in relation to human rights in Sudan. For information purposes, refer to: D. LARGE: “China and the Contradictions of ‘Non-Interference’ in Sudan” in Review of African Political Economy, Vol. 35 No. 115, pp. 93-106; also víd. S. SRINIVASAN: “A Marriage Less Convenient: China, Sudan and Darfur”, in K. AMPIAH and S. NAIDU (Eds.): Crouching Tiger, Hidden Dragon? Africa and China, Scottsville 2008, University of KwaZulu-Natal Press, pp. 55-85.
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A different problem arises when we face many States’ fragility, or even failure, which is
also a predominantly African problem516 on which the EU could further warn and assist
TCN’s. The Commission is aware that “specific approaches are required particularly for
fragile and conflict-affected countries that are urgently in need of jobs and economic
opportunities to restore social cohesion, peace and political stability”517, even though
more technical and detailed initiatives in this respect are pending to move beyond
institutional good intentions. In 2010 the Cotonou Agreement introduced a new article
11.4 to address States’ fragility, with a general call for multilateral cooperation to
“agree on the best way to strengthen capabilities of States to fulfil their core functions”,
but without really concrete ideas. EU Delegations in third countries are supposed to
advice EU-based companies in this regard as well as help them face the potential human
rights’ risks following to the Delegation’s field experience. The EIDHR is deploying a
network of focal points in EU Delegations, similarly to the OECD “national contact
points”. Coordinated multilateral actions are essential to get closer to any solution. The
international agenda has started with the AU, introducing business and human rights
issues, but needs to be translated into concrete actions in the future.
Indeed, as for the African, Caribbean and Pacific Group of States, the several revisions
of the Cotonou Agreement make it a promising text. The latest revision in 2010 has
added sustainable development goals and further human rights provisions, recognising
both civil and political and economic and social rights with a very positive level of
detail518. Notwithstanding these improvements and new references to the role of private
actors, the link between business and human rights is still under-developed.
Moving to another regional integration organisation, there are on-going negotiations
with the Community of Latin American and Caribbean States (CELAC). There have
been two EU-CELAC Summits (in Santiago –Chile January 2013 and in June 2015 in
516 The most comprehensive study on the phenomenon of fragile and failed States at: C. JIMENEZ PIERNAS: “Estados débiles y fracasados”, in Revista Española de Derecho Internacional, Vol. LXV No. 2 (2013), pp. 11-49. 517
COM (2014) 263, 13 May 2014, A Stronger Role of the Private Sector in Achieving Inclusive and Sustainable Growth in Developing Countries, p. 4. 518 Article 9 is one the most comprehensive examples of human rights provisions within a trade, investment and development international agreement, already in its 2005 version. During its 2010 revision, article 1 was amended to cite the Millennium Development Goals and climate change, non-state actors in article 4. EU-ACP Group of States: Agreement amending for the second time the Partnership Agreement between the members of the African Caribbean and Pacific Group of States, of the one part, and the European Community and its Member States, of the other part, signed in Cotonou on 23 June 2000, as first amended in Luxembourg on 25 June 2005, Official Journal of the European Union L 287, 4 November 2010, pp. 3 ff.
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Brussels). The first Summit ended up with a Declaration that formally acknowledged
the importance of coordinating CSR strategies in the two regions. In Latin America
CSR was interestingly linked to the fight against corruption (and the further ratification
of the UN Convention against Corruption)519, in addition to more classical issues as the
support of the Rio +20 agenda, the collaboration to build up a renovated post-2015
engagement520, and to promote socially and environmentally responsible investments
between the two regions521. In fact, two senior official seminars were organised to
follow up in October 2013 and September 2014 with a view to extending the
development of national action plans in both regions, as explicitly reaffirmed in June
2015 within the Brussels Declaration following to the II EU-CELAC Summit522.
The institutional cooperation, initiated with the AU, ACP States and CELAC, is likely
to be extended, if possible in similar terms, to the Association of Southeast Asian
Nations (ASEAN)523 and maybe other international organisations at a regional level.
In any case, multilateral initiatives are numerous: an example with major media
repercussions on an international scale was the tragedy in Rana Plaza (Bangladesh),
after which this country launched the “Sustainability Compact for Continuous
Improvements in Labour Rights and Factory Safety in the Ready-Made Garment and
Knitwear Industry”, with the support of the EU, the ILO and the US.
Also from this multilateral point of view, a comparable project takes place in
Myanmar/Burma to “Promote Fundamental Labour Rights and Practices”, under the
leadership of the EU and the ILO together with the participation of the US, Japan and
Denmark. Myanmar’s trade and development story brings us the opportunity to raise a
captivating case: being a frequent human rights violator, the Commonwealth of
Massachusetts (USA) adopted on the 25 June 1996 restrictive public procurement
legislation against Burma-Myanmar, which indirectly affected any EU-based company
519 EU-CELAC: Santiago Declaration, Santiago de Chile, 27 January 2013, [Council of the EU Doc. 5747/13], para. 37. It is well-known that corruption implies both public and private connivance. 520 Ibíd., para. 41. 521 Ibíd., para. 45. 522 « We commit to increase our joint efforts on corporate social responsibility, and in this context encourage the implementation of policies, National Action Plans and other initiatives aiming at promoting and strengthening the compliance with corporate social responsibility dispositions, principles and processes within the framework of the relevant international fora ». EU-CELAC: Brussels Declaration, Brussels, 11 June 2015, para. 50. (Council of the EU Doc. 9839/15). 523 EUROPEAN COMMISSION: Implementing the UN Guiding Principles on Business and Human Rights –State of Play, SWD (2015) 144 Final, 14 July 2015, p. 20.
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linked to that country (mainly due to trade relations or subsidiary structures). A year
later, the EC brought a formal complaint before the WTO –probably under the pressure
of companies– alleging a violation of articles VIII (B), X and XII of the Agreement on
Government Procurement524. Opportunely enough, the Federal District Court in Boston
annulled Massachusetts’ selective purchase Act so that the EC finally suspended the
proceedings against the USA in Geneva, revealing Europe’s certain degree of cynicism
and “inconsistency”525: at the same time of starting the dispute settlement within the
WTO, the EU had renewed its sanctions against Burma and withdrew it from the
General System of Preferences (GSP).
This case leads us onto the subject of the EU’s international commitment beyond
spontaneous multilateral projects after a disaster or the inter-regional level. It is crucial
to analyse the voice of the EU in global multilateral fora like the WTO. Fortunately,
Myanmar’s case is relatively out-of-date: the EU has realised that GSP can contribute to
extend CSR globally. Beginning with a focus on labour law, the European GSP human
rights requirements are wider and wider reform after reform. The European special
incentive arrangements, including labour and environmental standards, have legal bases
under the GATT Agreement (1994): despite the general Most Favoured Nation rule of
Article I, the so-called Enabling Clause allows tariff preferences towards developing
countries to help them meet their specific “development, financial and trade needs”526 –
it is worth highlighting that it is not restricted to trade and financial problems, but it is
extended to more general development goals.
A very important precedent-setting case brought by India against the EC provided the
opportunity to clarify under which conditions European tariff preferences for
developing countries comply with WTO Law (GATT Agreement in this case). The
WTO Dispute Settlement Body ruled in 2005 that some anti-drugs provisions of the
contested GSP (Reg. 2501/2001) were discriminatory and arbitrary: the Chapeau of art.
524 According the norms of procedure of the WTO Dispute Settlement Body, the EC first issued a Request for Consultations, 20 June 1997 (WTO Doc. WT/DS88/1), and after an initial negotiation the EC directly filed the Request for Establishment of a Panel (8 September 1998, WT/D88/3). 525 A. GATTO: “Corporate Social Responsibility in the External Relations of the EU”, in Yearbook of European Law, Vol. 24 (2005) No. 1, pp. 423-462, at p. 449. 526 Decision on Differential and More Favourable Treatment, Reciprocity and Fuller Participation of Developing Countries, 28 November 1979, GATT Document L/4903, mainly par. 3 c), 4, 5 and 8. This “Enabling Clause” is considered part of the GATT Agreement in line with paragraph 1 (b) iv) of Annex 1A incorporating GATT 1994 into the WTO Agreement, including “other decisions of the Contracting Parties to GATT 1947”.
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XX b) of GATT was not sufficient to justify a closed list of 12 beneficiaries in the
Drugs Arrangement, apparently excluding other developing countries. In doing so, the
Appellate Body (AB) upheld the Panel’s previous assessment527, but importantly
nuanced the reasoning and reversed some of the Panel’s conclusions: the discriminatory
nature of the Drugs Arrangement did not emanate from the fact that it was not granted
to all developing countries without distinctions, in a restrictive interpretation of the term
“discrimination”. Although agreements under the Enabling Clause do not annul the
necessary respect of non-discrimination between developing countries528, the Enabling
Clause itself also considers the possibility of distinguishing amongst developing
countries under certain circumstances529. According to the WTO AB, paragraph 3 of the
Enabling Clause envisages specific conditions to grant preferential treatment: the
existence of objective criteria to justify different treatment, due to “development,
financial and trade needs”, which “must be assessed according to an objective
standard”. Such criteria can respond to the “[b] road-based recognition of a particular
need, set out in the WTO Agreement or in multilateral instruments adopted by
international organisations, [which] could serve as such a standard”530. The EC Drugs
Arrangement provided a list of 12 beneficiaries without prerequisites, but it did not
detail any positive and objective criteria by which a developing country may qualify for
preferences, so that the EC failed to demonstrate the non-discriminatory nature of the
regulation (the absence of criteria makes it impossible to show it is not discriminatory).
Therefore, WTO law allows distinctions between developing countries: the EC Drugs
527 The final decision was taken in 2004 by the Appellate Body. WTO: European Communities –Conditions for the Granting of Tariff Preferences to Developing Countries. Report of the Appellate Body, 7 April 2004, Doc. WT/DS246/AB/R. 528 One of the Indian arguments held that, in supporting the Enabling Clause, “developing countries did not agree to relinquish their MFN rights as between themselves” (Ibíd., para. 47, pp. 18-19). This is only partially confirmed by the AB: differentiating between developing countries do not automatically constitute discrimination, even though the Enabling Clause does not become a general exception of MFN rule as certain conditions must be satisfied: “India submits that developing countries should not be presumed to have waived their MFN rights under Article I:1 of the GATT 1994 vis-à-vis other developing countries, and we make no such presumption. […]With this in mind, and given that paragraph 3(c) of the Enabling Clause contemplates, in certain circumstances, differentiation among GSP beneficiaries, we cannot agree with India that the right to MFN treatment can be invoked by a GSP beneficiary vis-à-vis other GSP beneficiaries in the context of GSP schemes that meet the conditions set out in the Enabling Clause”. Ibíd., para. 166 (p. 67). 529 The AB understands that “certain development needs may be common to only a certain number of developing countries”. Supra, note 135, WT/DS246/AB/R, para. 160 (p. 65). Furthermore, the AB states that “In sum, we read paragraph 3(c) [of the Enabling Clause] as authorizing preference-granting countries to ‘respond positively’ to ‘needs’ that are not necessarily common or shared by all developing countries. Responding to the ‘needs of developing countries’ may thus entail treating different developing-country beneficiaries differently”. Ibíd., para. 163 (p. 67). 530 Ibíd., para. 163 (p. 66).
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Arrangement was not discriminatory because of that, but because it did not include
‘objective criteria’ on ‘development, trade and financial needs’. The most crucial
progress is the mention of other international organisations to justify the objective
criteria behind preferential treatment systems in terms of “development, financial and
trade needs”.
Anyway, this precedent is essential to lawfully unite development, human rights and
trade in EU Law. Although the EC lost this case, the European GSP schemes were
paradoxically reinforced in terms of international trade law in order to legitimately and
legally cover development concerns, clarifying under which conditions. GSP schemes
can include CSR clauses and requisites, according to internationally recognised
standards, to help raise human rights in developing countries531. More recently, the EU
has actually included sustainable development and (explicitly) corporate social
responsibility in the EU-South Korea Free Trade Agreement (2009) and with Colombia
and Peru in March 2010, so we can truly speak of a “merger of Corporate Social
Responsibility into the EU Common Commercial Policy” 532. The WTO Agreements
have several open windows to which we already referred in the general part of this work
(in this case, the Enabling Clause and art. XX of GATT). The EU can put them into
practice, actually opening those windows, provided that certain legal conditions are met
–which don’t seem colossal or unmanageable.
The EU international commitment to foster CSR and business and human rights
principles can have two major consequences: first, to increase the level of consensus in
this regard within the international society; secondly, to effectively impact the
interpretation of the already available International Law to make changes possible,
without necessarily have recourse to new instruments.
Finally, the UN fora are also a good scenario for more political than technical
statements, also useful if they contribute to advance the state of opinion of the
international society. The EU has always participated with high level representatives to
531 A similar conclusion on the human rights’ potential of the India vs. EC case but by different means: A. GATTO: Multinational Enterprises and Human Rights. Obligations under EU Law and International Law, United Kingdom-USA 2011, Edward Elgar Publishing Ltd., pp. 246-252. 532 O. QUIRICO: “The Merger of Corporate Social Responsibility into the EU Common Commercial Policy”, in European Company Law, Vol. 9 (2012) No. 2, pp. 93-100, at pp. 94-95. According to the author, Parliament’s Resolutions 2009/2201 and 2010/2103 advocate to incorporate, respectively, CSR and climate change into the CCP. However, even if they point in the same direction, we would be cautious as to what extent the Commission will effectively put them in practice.
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support the implementation of the UNGP’s, particularly in all annual Forums on
Business and Human Rights in Geneva (Switzerland). Within the framework of the UN
OHCHR, the EU is collaborating with the project “Accountability and Remedy” to
increase the available information and advice for States on access to justice in cases of
human rights violations involving TNC’s533. Still pending is the cooperation or
adherence to the UN Principles for Responsible Management Education. Despite its
originality as an international organisation, the EU has also acted as such when it
supported the “Montreux Document on pertinent legal obligations and good practices
for States related to operations of private military and security companies during armed
conflict” , which is an highly topical problem, encouraging this way up to 23 EU
Member States to adhere to that document. Moreover, the EU as such has become
member of the Working Group on the International Code of Conduct Association, born
in 2013 in Geneva.
At a totally political level, in June 2015 and during the preparatory meetings of the G7
under the German Presidency, the EU apparently advocated for the inclusion of CSR
issues in the final Declaration534. It is important to note the explicit support of the
UNGP’s and the agreement to “urge private sector implementation of human rights due
diligence”535, placing strong emphasis on supply chains and labour standards (a specific
fund is foreseen in cooperation with the ILO, maybe extended to the G-20
participation).
Sustainable development, the MDG’s, the post-2015 agenda, and human rights are, in
conclusion, the rails of the EU’s institutional actions both inside and outside the EU, but
especially when engaging with third countries and other international organisations or
fora. All in all, there has been an international and institutional implementation of CSR
with an important role played by the Commission, albeit the challenge remains to make
a real impact in the field avoiding leftovers or loose ends.
533 For an analysis of this issue, see Chapter IV, Section 2. 534 EUROPEAN COMMISSION: Implementing the UN Guiding Principles on Business and Human Rights –State of Play, SWD (2015) 144 Final, 14 July 2015, p. 8. 535 G-7: Leaders’ Declaration “Think Ahead. Act Together”, 7-8 June 2015, Schloss Elmau (Germany), p. 6.
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3.2.3. Implementation of the CSR agenda: impact on EU Law
On top of the information/promotion initiatives and the international commitment at an
institutional level, we also find a good amount of actions with a clear impact on EU
Law, sometimes already in place and, in some other cases, with a remarkable potential
ad futuram. In other words, the implementation of the CSR agenda is having important
legal spill-overs in different law-fields.
A number of scandals (WorldCom, Tyco, Enron, Parmalat, Lehman Brothers, and very
recently Volkswagen) together with the financial (and then economic) crisis since
2007/2008, have both favoured a relative reversal of some of the previous neo-liberal
trends. This context explains why corporate governance has been one of the first areas
in which transparency and CSR have emerged. By way of introduction, we find an
unprecedented value judgement in recital 62 of Directive 2013/36/EU of the Parliament
and the Council: “Remuneration policies which encourage excessive risk-taking
behaviour can undermine sound and effective risk management of credit institutions and
investment firms”536. The debate is assured.
A characteristic corporate governance debate lies behind this problematic: modern
capitalist societies have witnessed an increasing separation between owners and
managers, at least in large companies. The power balance between them is a central
issue of corporate governance537, particularly centred on the protection of shareholders.
We can basically study corporate governance from three perspectives: company law,
capital market law and labour law. The evolution apparently shows a monopolisation by
capital market law, a “marketization” of corporate governance whose main criticism
may be the relegation of workers’ rights to vaguer social issues, with blatant examples
in the occasion of takeovers538. From this rather critical view, in interpreting corporate
law “the ECJ has legally reinforced the four freedoms, bypassing a political debate on
536 Directive 2013/36/EU of the European Parliament and the Council, 26 June 2013, on access to the activity of credit institutions and the prudential supervision of credit institutions and investment firms, amending Directive 2002/87/EC and repealing Directives 2006/48/EC and 2006/49/EC, Official Journal of the European Union L-176, pp. 338-436, 27 June 2013, at recital 62 (p. 345). 537 The off-cited classic text, from 1932, already pointed to the increasing dispersion of ownership in larger companies creating control problems with the appearance of a more and more autonomous management cast: A.A. BERLE (Jr.) and G.C. MEANS: The Modern Corporation and Private Property, New York 1932, Macmillan, xiii + 396 pp, passim. 538 L. HORN: “Corporate Governance in Crisis? The Politics of EU Corporate Governance Regulation”, in European Law Journal, Vol. 18 No. 1 (January 2012), pp. 83-107, at pp. 94-95.
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the subordination of social policies and rights to capitalist freedoms”539, “within the
broader context of deepening financial market integration in the EU and the dominance
of financial market imperatives”540.
Being partly correct, it seems to us a rather exaggerated conclusion, in light of recent
EU Directives that head to compulsory transparency measures with a wider range of
addressees: “Mandatory reporting in that area can therefore be seen as an important
element of the corporate responsibility of institutions towards stakeholders and society”
(not only shareholders)541. The EU has perfectly taken note of the traps behind
voluntary codes when analysing the misconduct of the financial sector before the
crisis542, and even encourages Member States to go beyond the European incipient
regulations543. In the area of corporate governance, the so-called Accounting Directives
have suffered similar changes544: Directive 2013/34/EU marks a turning point as it
establishes that undertakings considered of “public-interest”, i.e., admitted to stock
markets in the EU, have the obligation to elaborate corporate governance statements.
This information should include the applicable corporate code of conduct, any code
voluntarily adopted and practices “over and above the requirements of national law”545,
confirming that CSR already has a place under the sun and consists of going beyond
legal obligations. It also covers control and risk management systems and details on the
management and supervisory bodies.
In addition to this, we also find in Directive 2013/34/EU546 a very innovative measure
that obliges the extractive industry (minerals, oil, natural gas, deposits and other
539 Ibíd., p. 98. 540 Ibíd., p. 101. 541 Directive 2013/36/EU, op. cit., recital 52 (p. 343). 542 “The very general provisions on governance of institutions and the non-binding nature of a substantial part of the corporate governance framework, based essentially on voluntary codes of conduct, did not sufficiently facilitate the effective implementation of sound corporate governance practices by institutions. […] The unclear role of the competent authorities in overseeing corporate governance systems in institutions did not allow for sufficient supervision of the effectiveness of the internal governance processes”. Ibíd., recital 53 (pp. 343-344). 543 “Member States should be able to impose corporate governance principles and standards additional to those required by this Directive”, Ibíd., recital 54 (p. 344). 544 We already referred to some disclosure and accounting requirements when we analysed the initial steps of CSR in the EU, before 2009. See supra, heading 3.1, item 1, at pp. 40-41. We now study its reform within more recent Accounting Directives that have strengthened the CSR requirements. 545 Directive 2013/34/EU of the European Parliament and the Council, 26 June 2013, on the annual financial statements, consolidated financial statements and related reports of certain types of undertakings, amending Directive 2006/43/EC of the European Parliament and of the Council and repealing Council Directives 78/660/EEC and 83/349/EEC, Official Journal of the European Union, 29 June 2013, L 182 pp. 19 ff., article 20 (at pp. 38-39). 546 For national practice and deadlines for transposition, please, refer to the following section.
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materials as well as active in the logging of primary forests) to report on payments to
governments over €100,000 within a financial year, in money or in kind including tax
exemptions, royalties and dividends, licence fees or payments for infrastructure
improvements547. The negotiation of this aspect has been tough and long, for evident
reasons: the Commissions’ proposal was dated October 2011 and the aforementioned
Directive wasn’t adopted until mid-2013, undergoing in this regard some important
modifications. In particular, it should be noted that the legislative proposal made by the
Commission548 was even more restrictive and did not include any payment out of
control (the €100,000 limit).
Here the US’s influence is clear: precisely in January 2010 and with bipartisan support,
the US adopted in a joint session of the Congress and the Senate the Dodd-Frank Wall
Street Reform and Consumer Protection Act, to enhance transparency and financial
stability. Under its section 1504, an addendum (letter Q) is made to Section 13 of the
Securities Exchange Act (1934), to oblige the extractive industry to report on payments
to governments, in very comparable terms to those used –later– in the EU. The US Act
commissioned the SEC to detail in a further regulation the quantities, types of payments
or projects and other operative provisions549. In August 2012 the SEC issued the final
rule limiting it to payments over $100,000 (aggregate or individually), exactly the same
symbolic amount established in Directive 2013/34/EU in June 2013. However,
following to a suit filed by a coalition of industry groups (leaded by Exxon Mobil,
Chevron, Royal Dutch Shell and BP), the SEC rule was annulled in July 2013 by the US
District Court in Washington DC and will have to be reviewed. In September 2014,
after the 270 days deadline, Oxfam America filed a new suit to put pressure on the SEC
to approve a final ruling, which is not likely to be ready before spring 2016.
547 Ibíd., Chapter 10, articles 41-46 (at pp. 52-53). 548 COM (2011) 684 Final, of 25 October 2011, Proposal for a Directive of the European Parliament and the Council on the annual financial statements, consolidated financial statements and related reports of certain types of undertakings, pp. 61-62. 549 “Not later than 270 days after the date of enactment of the Dodd-Frank Wall Street Reform and Consumer Protection Act, the Commission shall issue final rules that require each resource extraction issuer to include in an annual report of the resource extraction issuer information relating to any payment made by the resource extraction issuer, a subsidiary of the resource extraction issuer, or an entity under the control of the resource extraction issuer to a foreign government or the Federal Government for the purpose of commercial development of oil, natural gas or minerals, including: i) the type and total amount of such payments made for each project of the resource extraction issuer relating to the commercial development of oil, natural gas or minerals; and ii) the type and total amount of such payments made to each government”. CONGRESS OF THE USA (111th): Dodd-Frank Wall Street Reform and Consumer Protection Act, 5 January 2010, Section 1504, H.R. 4173 pp. 845-847, at pp. 845-846, article Q, 2 (A). Emphasis added.
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In any case, the European Directive was passed in the meanwhile (2013), with a clear
American influence, despite the current problems and delays to be finally implemented
in the US. The Directive’s level of transposition into national law by Member States is
very low despite the relative margin of appreciation, and the scarce national
implementing measures generally do not include this requirement for the extractive
industry550. In spite of all, it constitutes a benchmark as it openly recognises the
importance of non-financial information from a social and environmental approach551,
particularly addressed at the extractive industry, which is frequently the target of human
rights defenders.
Directive 2013/34/EU, in turn, has been significantly amended by Directive
2014/95/EU in order to further reinforce CSR requirements, extending non-financial
reporting to large companies (more than 500 employees), whether they operate or not in
the stock markets. Directive 2014/95/EU also changes the content of corporate
governance reports and stipulates that they will comprise “as a minimum,
environmental, social and employee matters, respect for human rights, anti-corruption
and bribery matters”552. This amendment maintains the provision on reports of
payments to governments by the extractive industry, but constitutes a crucial
improvement of Directive 2013/34/EU. It recognises, in a legally binding text, the
centrality of human rights in CSR. Guidelines on non-financial reporting are expected
by December 2016, the same deadline for transposition, so that the first reports shall be
issued for the financial year 2017.
Through this initial legal work, the EU further assumes the “multidimensional nature of
corporate social responsibility”553, indirectly recognising the usefulness of social
550 At the moment of closing this research, only five Member States have partially implemented the Directive. See National Implementing Measures of the Directive at: http://eur-lex.europa.eu/legal-content/EN/NIM/?uri=celex:32013L0034 551 “The information should not be restricted to the financial aspects of the undertaking’s business, and there should be an analysis of environmental and social aspects of the business necessary for an understanding of the undertaking’s development, performance or position”, Directive 2013/34/EU, op. cit., at recital 26 (p. 22 of the OJEU). 552 Emphasis added. This remains applicable, now with the amendment including inter alia human rights, for undertakings trading in the stock markets, correcting so Directive 2013/34/EU with two new articles, 19 a) and 29 a): Directive 2014/95/EU of the European Parliament and of the Council, 22 October 2014, amending Directive 2013/34/EU as regards disclosure of non-financial and diversity information by certain large undertakings and groups, Official Journal of the European Union, 15 November 2014, L 330 pp. 1 ff., at article 1, pp. 4-6. 553 Ibíd., recital 3 (at p. 1 of the OJEU).
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coercion implied by soft law approaches554, which has begun with disclosure
requirements. Indeed, “non-financial transparency is therefore a key element of any
CSR policy”555; the EU works on transparency issues since the last decade but,
combined with CSR within the framework of corporate governance, it can improve both
the internal market and respect for human rights556.
Perhaps less ambitious at first sight than the above-cited Directives, the protection of
retail investors has received particular attention in terms of transparency and social
responsibility, what is by the way very important taking into account the large number
of individuals and families who had purchased toxic assets before the financial crisis,
including complex financial products that embedded derivatives, without due
information. In this respect, a recent Regulation557 has laid down new simplified
disclosure obligations and standardised leaflets to duly inform eventual retail investors;
from now on, they can apply for compensation if they succeed to demonstrate that
losses result from the reliance on that “key information document”. In view of the
complexity of many financial products from the perspective of retail investors, the
Commission had proposed the reversal of the burden of the proof558. But the Council
finally rejected it and further stated that the manufacturers of such products “shall not
incur civil liability solely on the bases of the key information document” (article 11 of
the Regulation), unless the documents are clearly misleading or inaccurate. To some
extent, the reversal of the burden of the proof has become a fashionable legal tool, also
in human rights law, but its abuse isn’t either advisable and does not necessarily bring
the solutions to the problems. In this sense, we think that this Regulation is a new
element towards integrating CSR in corporate governance, in the belief that
“ [i] ncreasingly, retail investors pursue, along with the financial returns on their
554 “This would inform the market of corporate governance practices and thus put indirect pressures on undertakings”, Ibíd., recital 18 (at p. 3). The Commission by the way continues to encourage Member States to go further: “This should not prevent Member States from requiring disclosure of non-financial information from undertakings and groups other than undertakings which are subject to this Directive” (recital 14). 555 COM (2013) 207 Final, 16 March 2013, Proposal for a Directive of the European Parliament of the Council amending Council Directives 78/660/EEC and 83/349/EEC as regards disclosure of non-financial and diversity information by certain large companies and groups, p.2. 556 M. SONMEZ: “The Role of Transparency in Corporate Governance and Its Regulation in the EU”, in European Company Law, Vol. 10 No. 4/5 (2013), pp. 139-146, at pp. 144-145. 557 Regulation (EU) No. 1286/2014 of the European Parliament and of the Council, 26 November 2014, on key information documents for packaged retail and insurance-based investment products (PRIIPs), Official Journal of the European Union, L 352, pp. 1 ff., at article 11 (p. 14). 558 COM(2012) 352 Final, 3rd July 2012, Proposal for a Regulation of the European Parliament and of the Council on key information documents for investment products, article 11, pp. 24-25.
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investment, additional purposes such as social or environmental goals”559. Accepting
that there are no “one-size fits all” solutions, the CSR legal spill-overs are taking the
form of “comply or explain mandates” to start enhancing disclosure of non-financial
information, also in the area of energy and pollution560.
Notwithstanding these improvements in the area of corporate governance, when the
Commission has tried to move forward with more precise actions beyond disclosure
requirements, it has encountered some barriers. This is what happens to the project to
regulate “supply chain due diligence self-certification of responsible importers of tin,
tantalum and tungsten, their ores, and gold originating in conflict-affected and high-risk
areas”. In 2010 the EP asked the Commission to imitate (again) the US –the above-cited
Dodd-Frank Wall Street Reform and Consumer Protection Act (in this case, Section
1502)561, built upon the OECD Due Diligence Guidance for Responsible Supply Chains
of Minerals from Conflict-Affected and High-Risk Areas. The Commission’s proposal
consists of a hard norm, which would serve as a framework for self-regulation
(certifications and good practices) to foster responsible supply chains in this highly
sensitive trade of minerals. The public competent authorities would help to implement
self-certifications and provide with the structures for review, reporting and claiming,
being thus a more daring initiative. The Commission advocates for a mixed hard and
soft approach, in which companies partly manage a self-certificate as “responsible
importers” but, once in, they must fully comply with the OECD guidelines and accept
supervision and reporting. Another option would be to make it compulsory to join the
system, so that the number of Companies would be higher, but the requirements would
eventually persuade them to leave certain risk areas looking for an alternative sourcing,
to make it easier to comply with the standards. This would probably generate serious
market distortions when abandoning already weak countries, in which companies would
not source anymore. What is more, by leaving these conflict-affected or high-risk areas,
at the end, nothing would point to improvements on the ground. Since 2010, after the
approval of Dodd-Frank Act, it has been assessed a drastic reduction of exports and
increase of informal trade networks in DRC and neighbouring countries of the Great 559 Regulation (EU) No. 1286/2014, op. cit., recital 19 (at p. 4 of the OJEU). 560 M. A. CAMILLERI: “Environmental, social and governance disclosures in Europe”, op. cit., at pp. 238-239. 561 COM(2014) 111 Final, 5 March 2014, Proposal for a Regulation of the European Parliament and of the Council setting up a Union system for supply chain due diligence self-regulation of responsible importers of tin, tantalum and tungsten, their ores, and gold originating in conflict-affected and high risk areas, recital 7, p. 3.
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Lakes Region where, again, we face the problem of failed States (DRC). This negative
impact562, according to the Commission, could be minimised if the Regulation
maintains the half-voluntary character of this self-certification system, so as to avoid
worsening the problems at source by simply abandoning these areas.
The fact is that the EP called on the Commission to regulate this matter in 2010, again
inspired by the USA’s Dodd-Frank Act (here Section 1502), but the proposal was not
drafted and published until 2014. The outcome is still unclear. Politically speaking, the
Commission united to the High Representative of the European Union for Foreign
Affairs and Security Policy to put pressure on the Council and the Parliament, stressing
the development and human rights coherence of adopting such a regulation, in the
exposed terms, consistently with the values that should inform EU’s external action563.
For instance, the Parliament’s reaction has been a profusion of amendments adopted on
20 May 2015, even asking for a tougher regulation and accentuating the human rights
aspects564. Although the negotiations seem to be delayed sine die, sooner or later it will
certainly impact EU Law, probably in a positive manner if it succeeds in balancing, to
the extent possible, the necessary requirement of responsible imports with the
development needs of those areas.
Finally, a complementary way to promote CSR through legally-binding instruments is
the recent and innovative public procurement reform, which facilitates at the same time
market reward to socially responsible companies. The EU has enforced new provisions
that establish, as a general rule, that Member States’ public contracts shall comply with
the “applicable obligations in the fields of environmental, social and labour law
established by Union law, national law, and collective agreements or by the
international environmental, social and labour law provisions listed in Annex X”565. For
562 The Commission’s policy assessment can be found at the Staff Working Document: SWD(2014) 52 Final, Executive Summary of the Impact Assessment Accompanying the document “Proposal for a Regulation of the European Parliament and of the Council setting up a Union system for supply chain due diligence self-certification of responsible importers of tin, tantalum and tungsten, their ores, and gold originating in conflict-affected and high-risk areas”. 563 JOIN(2014) 8 Final, 5 March 2014, Joint Communication to the European Parliament and the Council. Responsible sourcing of minerals originating in conflict-affected and high-risk areas. Towards an integrated EU approach, 13 pp. 564 EUROPEAN PARLIAMENT: Amendments adopted on the proposal for a regulation of the European Parliament and of the Council setting up a Union system for supply chain due diligence self-certification of responsible importer of tin, tantalum and tungsten, their ores, and gold originating in conflict-affected and high-risk areas, 20 May 2015, P8_TA-PROV(2015)0204. 565 Directive 2014/24/EU of the European Parliament and of the Council, 26 February 2014, on public procurement and repealing Directive 2004/18/EC, Official Journal of the European Union, 28 March
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that purpose, labels can be used to evaluate candidates so that more economically
advantageous tenderers might be rejected for those reasons 566.
We find equivalent measures in Directive 2014/25/EU, specifically addressing public
procurement in the water, energy, transport and postal services sectors567: article 36.2
lays down the same labour, social and environmental principles, also evaluable through
the appropriate labels (art. 61) and provides with a list of international agreements in
Annex XIV. However, Annex X of Directive 2014/24/EU and Annex XIV of Directive
2014/25 /EU completely forget two basic international human rights instruments:
neither the International Covenant on Civil and Political Rights nor the International
Covenant on Economic, Social and Cultural Rights are apparently part of the EU
“environmental, social and labour” standards dealing with public procurement,
according to these Annexes, despite correctly citing many ILO and other environmental
conventions. The Commission could easily correct it, for example, adding the above-
mentioned Conventions to Annex XIV of Directive 2014/25/EU, as a delegated act
expressly foreseen by art. 76.8 of this Directive, given that all Member States have
ratified both the ICCPR and the ICESCR568. In sum, despite improvable details, the
public procurement reform has introduced new CSR criteria to award public contracts.
To recapitulate, CSR has firstly been introduced in corporate governance, initiating an
unprecedented role in legally binding texts. Its incipient impact on the financial sector
led to the control of credit and investment institutions, including risk-linked
remuneration policies within management boards and gender balance (Directive
2013/36/EU). This was followed up with the protection of retail investors against
misleading and aggressive practices, including new social and environmental
considerations (Regulation (EU) No. 1286/2014). CSR has been extended also to non-
2014, L 94, pp. 65 ff., art. 18.2 (at p. 106). Similar provisions but in more general terms are found at Directive 2014/23/EU. 566 Directive 2014/24/EU, articles 56.1 and 57.4 a) read together with art. 18.2. Ibíd., at p. 122 of the OJEU. However, it must be noted that, according to art. 9, these rules apply only internally so that contracts pursuant international rules are excluded, a loop-hole in the EU’s consistency ad extra. 567 Directive 2014/25/EU of the European Parliament and of the Council, 26 February 2014, on procurement by entities operating in the water, energy, transport and postal services sectors and repealing Directive 2004/17/EC, Official Journal of the European Union, 28 March 2014, L 94, p. 243 ff. 568 All 28 Member States have ratified the ICCPR and the ICESCR of 1966 (to check the status of signatures and ratifications see https://treaties.un.org/). However, it must be highlighted that, as for their respective Optional Protocols –allowing individual complaints and the competences of the UN Committees on CPR or ESCR– all Member States except the UK have ratified the Optional Protocol of the ICCPR and only seven Member States have ratified the OP to the ICESCR (Spain, Slovakia, Portugal, Luxembourg, France, Belgium and Italy). The Netherlands have signed the OP to the ICESCR but has not ratified the text yet.
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financial disclosure requirements from a human rights approach (Directive 2013/34/EU
and its partial amendment in Dir. 2014/95/EU), what applies to large companies in
general terms (a potential of ca. 6000 EU Companies). Also Directive 2013/34/EU sets
innovative reporting obligations for the extractive industry on payments to governments
above €100000, what is likely to become an utterly interesting instrument to increase
control on this industry as well as in the fight against corruption in developing
countries. As can be seen, CSR has firstly penetrated the European Corporate
Governance Regulation, which has become an “extremely versatile, comparative and
transnational legal field”; in the overall, we detect positive aspects to the extent “both
hard and soft norms governing particular elements of corporate governance, accentuates
the degree to which European Corporate Governance Regulation has come under
pressure to facilitate quasi-neutral, ‘best’ practices in ‘good’ corporate governance”569.
In the end, we have seen that a comprehensive public procurement reform has added
new CSR contracting requirements to be further regulated by Member States (Directives
2014/24/EU and 2014/25/EU). Then, the pending regulation on responsible supply
chains of minerals appears a promising initiative, once more combining hard and soft
norms, while the Commission seems to bear in mind the need to address human rights
problems at source. We therefore note that the implementation of the CSR agenda has
incipient legal spill-overs, which are far from negligible; it does not seem unreasonable
to predict that this tendency will continue.
3.3. National initiatives in the EU
3.3.1. Member States’ role: challenges and opportunities
The importance of Member States in ensuring the implementation of any EU policy or
piece of legislation is beyond any doubt and the diverse levels of compliance have for
long received the attention of the literature. It is too soon to make any study on the
transposition of the CSR-aspects of the Directives analysed above; once possible, i.e.,
after the expiration of the deadlines for transposition or even slightly later, such a
research might be of interest to confront it to the state of the art. For instance, the
569 P. ZUMBANSEN: “New Governance in European Corporate Law Regulation as Transnational Legal Pluralism”, in European Law Journal, Vol. 15 No. 2 (March 2009), pp. 246-276, at pp. 247 and 251 (citations).
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deadline for transposition of Directive 2013/34/EU expired 20 July 2015 and no
Member State has yet transposed into national law the aspects related to the disclosure
of payments to governments by the extractive industry (arts. 41-46 of the Directive,
which were not modified by Dir. 2014/95/EU so that the transposition deadline was not
postponed in this regard). The transposition deadline for Directive 2014/95/EU,
strengthening the CSR reporting requirements for large companies, expires 6 December
2016. It happens the same with the public procurement reform (2014/24/EU and
2014/25/EU, deadline 18 April 2016) so that they might be applied for the financial year
2017, even though States like France, the Netherlands or Finland include similar
provisions in their public procurements well before the appearance of these Directives,
as we will illustrate below. Again, it is too soon to draw any conclusion on national
implementing measures. Likewise, it would be premature to fully evaluate to what
extent the EU succeeds in effectively mobilising Member States; only some preliminary
comments might be done with the limited value of an early assessment.
The limits of Member States’ discretion is a more than usual EU Law issue: if
Directives impose obligations of results without predetermining the means, one can
imagine to what extent soft law and CSR leave an ample room for manoeuvre.
Harmonisation seems easier with soft law under the OMC (despite its imperfections, as
discussed elsewhere in this work570) and it can be sometimes even more suitable, for
example, to leave space for experimentation when national business systems and other
national constraints widely differ. At the national level, the UN Guiding Principle 3-b)
invites States to “provide effective guidance to business enterprises on how to respect
human rights throughout their operations”, at the same time they ensure the human
rights-consistency of their legislation (UNGP 3-a)). This is the basis of Member States’
role.
The EU has taken over the responsibility to promote compliance with the UNGPs
among Member States. The famous Renewed EU Strategy 2011-2014 for CSR already
asked Member States “to develop or update by mid-2012 their own plans or national
lists of priority actions to promote CSR” 571, within the broader context of several peer
reviews to exchange information and experiences. The Commission has undertaken
seven of such peer reviews in 2013 to study the best policy options at a national level.
570 See below Chapter IV, section 1. 571 COM (2011) 681 Final, op. cit., para. 4.7, pp. 12-13.
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In June 2012, the Action Plan on Human Rights and Democracy for 2012-2014, issued
at the same time of the EU Strategic Framework on the same subject, foresees to
“develop National Action Plans for EU Member States on implementation of the
UNGPs”, ideally by 2013572. The Action Plan on Human Rights and Democracy has
been updated for the period 2015-2019 but the need to “develop and implement
National Action Plans (NAPs) on the implementation of the UN Guiding Principles” 573
is repeated. The current Action Plan then reiterates the necessary commitment at the
national level and extends the deadline to 2017.
Indeed, at the time of writing, only five Member States have developed such NAPs on
“business and human rights”, thus implementing the UNGPs: Finland, the United
Kingdom, The Netherlands, Denmark and Italy (a preliminary version considered
valid). The COHOM is supposed to stimulate their adoption and monitor the state of
implementation, apparently without much success in view of the modest number of
NAPs on business and human rights.
Nevertheless, up to eighteen Member States have specific NAPs on CSR (nineteen if we
add the United Kingdom, with a longer tradition in this regard). Perhaps CSR has
become a more attractive denomination (19 NAPs) compared to the “business and
human rights” label (5 NAPs), despite their obvious closeness and the insistence of the
EU to endorse the UN approach. Member States might be reluctant to intensify the
human rights language within CSR, forgetting that the most effective way to approach
the latter is through the UNGPs.
Concerning NAPs on CSR, there are also a number of ways to adopt them: according to
the latest available information574, only Cyprus and Bulgaria detailed the approval by
the Council of Ministers, which seems the most authoritative option given the complex
interaction between legal force and political power in our topic575. But the most usual
572 COUNCIL OF THE EU: EU Strategic Framework and Action Plan on Human Rights and Democracy, Luxembourg, 25 June 2012, Council Doc. 11855/12, Annex, Action 25 c), p. 20. 573 EUROPEAN COMMISSION and HIGH REPRESENTATIVE FOR FOREIGN AFFAIRS AND SECURITY POLICY: Joint Communication to the European Parliament and to the Council. Action Plan on Human Rights and Democracy (2015-2019). “Keeping Human Rights at the heart of the EU Agenda”. Brussels, 28 April 2015, JOIN (2015) 16 Final, Action 17 b), p. 14. 574 EUROPEAN COMMISSION: Corporate Social Responsibility. National Public Policies in the European Union (Compendium 2014), Brussels, June 2014, pp.14-15 and Annex (pp. 60-100). 575 Information provided to this author by participants in the Spanish working group indicates that the Spanish NAP, under development, would also be submitted for deliberation and approval by the Council of Ministers.
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procedure consists of more or less informal governmental publications (a memorandum
in Latvia, preparatory documents in France, non-binding policy papers issued by
commissions or committees such as the Danish Council for CSR or the
Interdepartmental Commission on Sustainable Development in Belgium –governmental
bodies without real legislative powers). Screening all EU Member States, we further
note that the Czech Republic has decided to add the UNGP’s within the already done
CSR plan, and Malta is considering the same possibility for their NAP on CSR under
development. That raises the question as to what extent two separate action plans are
really necessary (one on CSR and a second one on business and human rights).
For the time being, NAPs on CSR rarely lead to legislative actions; on the contrary,
most of the time policies propose awareness raising and promotional activities, the
softest options. To cite only a few examples: the usual eco-labels in Nordic countries;
the Dutch online-tool to provide Companies with country assessments of human rights’
risks in third countries; a Polish CSR capacity-building program for SMEs; the Austrian
toolkit for gender equality; the Estonian CSR label; the Irish “Business Working
Responsibility Mark” to certify responsible and sustainable businesses; a CSR
dictionary in Croatia; the Danish Partnership for Public Green Procurement; the Finish
website “CSR Compass” to guide on CSR within public procurement; etc.
Harder or softer, consolidated or recent, the fact is that 19 Member States have NAPs on
CSR while only five on the UNGP’s. As stated, this is of course an additional aspect to
complete a wider picture of the national initiatives in the EU. There are other
differences among Member States caused by simpler factors: political tradition, the
maturity of the civil society and quality of democracy, plus the diverse understandings
of market coordinated economies. In this sense, the enlargement eastwards has
incorporated countries with a less enthusiastic attitude towards any eventual hardening
of CSR, since the attraction of FDIs constitutes there a priority and there is some
historical fear to reintroduce politics in the economy.
Economically speaking, the key factors that explain national differences in the EU are
the greater or lesser exposure to international trade and supply chains, the importance of
exports and the balance of payments, the relative weight of SMEs in the GDP, the major
sectors of the economy, the number of MNC’s headquarters, and the macro- and micro-
economic situation in the overall.
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As for the economic situation, many European NAPs on CSR include measures that
actually respond to the crisis since 2007/2008, to tackle structural unemployment,
youngsters and elderly people, and other internal problems (mainly in social affairs).
Suffice the example of the Spanish label to acknowledge companies that take part in the
“Strategy for Entrepreneurship and Youth Employment”. The crisis has generated a
series of human rights challenges in some EU Member States: of course, one of the
objectives of CSR is to enhance preventive measures to promote human rights’
horizontal effects, while actively involving private actors, with two dimensions, external
and internal. But an excessive focus on the internal aspects may distort the sense of
CSR. The obligation to respect core human rights treaties already existed for EU
Member States, so that the predominance of internal social affairs is somehow
unfocused, despite being a perfectly understandable priority. In this regard, it is basic to
keep a distance and remain critical: we do not think that the contingent character of this
crisis-motivated and internally-oriented approach to CSR is likely to bring about
durable and positive changes, neither for society nor for companies themselves.
In sum, national initiatives need to be contextualised within a broader analytical
framework. On the ground, 39.83% of companies included in the Dow Jones
Sustainability Index are located in EU Member States. We can list the EU countries in
order: United Kingdom (second position; 12.57% of companies incorporated to the
DJSI are British), Germany (4th position; 8.14%), France (5th; 6.75%), Spain (8th;
3’65%), Netherlands (10th; 3.10%), Italy (12th; 2.79%), Denmark (13th; 1.42%), Sweden
(15th; 1.02%), Finland (20th; 0.20%), Portugal (23rd; 0.15%) and Belgium (25th;
0.04%)576. It must be noted that Netherlands, Finland, Denmark, the United Kingdom
and Italy, all having both NAPs (on CSR and on the UNGPs) do not necessarily have a
higher number of companies within the DJSI compared to countries that only have
NAPs on CSR (Sweden, France, Germany and Belgium), or compared to those with
none of the two NAPs yet (Spain and Portugal, under development though). Moreover,
these results need to be interpreted in the light of offshoring processes by which the
dirtiest industries or production phases have been moved from advanced economies to
576 Dow Jones Sustainability World Index. Data calculated in USD as of end of July 2015. Available at http://djindexes.com/sustainability/?go=literature.
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other parts of the world577, improving OECD countries’ performance in environmental
and social matters.
This reminds us the OECD Guidelines for Multinational Enterprises: twenty-four EU
Member States have adhered578, obliging themselves to establish National Contact
Points with three main functions: CSR promotion, enquiries and research tasks, and the
establishment of non-judicial dispute mediation mechanisms in some cases of alleged
non-compliance with the Guidelines. Luxembourg or Austria have no NAPs yet, but
they have adhered to the OECD Guidelines, and both established in 2000 their
respective National Contact Points within the Ministry of Economy.
In view of all that has been set out above, the presence of NAPs on CSR or specifically
on business and human rights, or both of them, is not necessarily correlated to a better
CSR performance. It will only be a sign, an indicative element that needs to be assessed
through political, legal and economic filters.
Denmark and France are good examples to complete this picture and reveal some grey
zones: the Commission has not always been the torchbearer. Denmark has published its
NAP on CSR in 2008 and on the UNGPs in 2014, but as early as 2008 an amendment to
the Danish law on Financial Statements added new CSR requirements well-above the
Directive applicable at that time and even more stringent than the current ones, with
effects on companies above 250 employees (while the EU stated 500 employees). This
constitutes an innovative and visionary introduction of CSR in Danish Company Law,
with a clear human rights language; while specific CSR actions are up to the companies,
the obligation is clear on the reporting side, marking a “gradual jurification of societal
expectations of companies”579, extrapolating international standards and leading the way
in the EU.
577 “[A] dvanced economies have often moved their more dirty industries to other parts of the world where there are less stringent environmental and social standards. As a result, other countries may be polluting on their behalf and the indexes do not factor those in”. R. MULLERAT: “Corporate Social Responsibility: A European Perspective”, in Jean Monnet/Robert Schuman Paper Series (University of Miami), Vol. 13 No. 6 (June 2013), 22 pp. at p. 4. 578 45 States in total have adhered, so EU countries represent more than a half of the global support of the OECD Guidelines. EU Member States that adhered to the Guidelines are: Austria, Belgium, Czech Republic, Denmark, Estonia, Finland, France, Germany, Greece, Hungary, Ireland, Italy, Latvia, Lithuania, Luxembourg, Netherlands, Poland, Portugal, Romania, Slovakia, Slovenia, Spain, Sweden and the United Kingdom. As usual, a different problem is the extent to which the general public has this information. See https://mneguidelines.oecd.org/ncps/ 579 K. BUHMAN: “The Danish CSR Reporting Requirement: Migration of CSR-Related International Norms into Companies’ Self Regulation through Company Law?”, in European Company Law, Vol. 8
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France has been far in front of other countries in continental Europe too: well-before the
publication of the preparatory document for the French NAP on CSR (January 2013),
and well in advance of Directives 2013/34/EU and 2014/95/EU, the French Grenelle
Law of 2001, reformed in 2010 precisely to reinforce its CSR aspects, already
established quite stringent non-financial disclosure requirements for companies. That is,
three years before any EU directive was contemplated. The so-called Grenelle II Law
(2010) did not just affect corporations operating in the stock markets, but also large
companies in general terms as well as investment companies580. Investment funds and
asset management companies have, since 2010, to prepare annual reports on the criteria
concerning «le respect d’objectifs sociaux, environnementaux et de qualité de
gouvernance». Furthermore, article 225 of the Grenelle II Law importantly clarifies
their content: «Il comprend également des informations sur la manière dont la société
prend en compte les conséquences sociales et environnementales de son activité ainsi
que sur ses engagements sociétaux en faveur du développement durable […] sur la
société elle-même ainsi que sur l’ensemble de ses filiales […] ou les sociétés qu’elle
contrôle […]»581. This French Law has another cutting-edge aspect: the creation of an
independent monitoring body, tasked to verify the soundness of corporate reports and,
as of the year 2016, empowered to issue an opinion («un avis motivé») on the sincerity
of the content («la sincérité des informations»)582 –a bit ingenuous in Foucauldian
terms583.
No. 2/3 (2011), pp. 65-73, p. 73. Only unofficial English translations are available of the cited Danish law; the reference of the law is “Act No. 1403 (27 December 2008) amending the Act on Financial Statements (Lov om aendring af arsregnskabsloven)”. 580 There is an abundant French literature on the issue. A short but good in English: V. MAGNIER: “New Trends in French Corporate Governance: Towards a Stakeholder oriented Approach?” in European Company Law, Vol. 9 No. 5 (2012), pp. 245-249, passim. 581 Law No. 2010-788 of 12 July 2010 (“portant engagement national pour l’environnement”), Journal Officiel de la République Française, No. 0160 du 13 Juillet 2010, page 12905, art. 224 and 225. 582 One year and a half after the adoption of Grenelle II Law, the Conseil d’Etat issued the application Decree No. 2012-557 of 24 April 2012 to finally regulate some operative aspects, establishing a progressive entry into force, in such a way that the first year (2011) only companies in the stock markets and those with more than 5000 employees would be affected, extending it in 2012 to companies with more than 2000 employees and finally, in 2013, to any company with more than 500 employees (or equivalent revenue criteria according to the French legislation). The application decree also regulates the independent monitoring body to which we refer in the text above. Décret nº 2012-557 du 24 avril 212 relatif aux obligations de transparence des entreprises en matière sociale et environnementale, Journal Officiel de la République Française No. 0099 du 26 avril 2012, page 7439, art. 1. French legislation is available at : www.legifrance.gouv.fr 583 « Il n’y a pas d’exercice du pouvoir sans une certaine économie des discours de vérité fonctionnant dans, à partir de et à travers ce pouvoir. Nous sommes soumis par le pouvoir à la production de la vérité et nous ne pouvons exercer le pouvoir que par la production de la vérité. C’est vrai de toute société, mais je crois que dans la nôtre ce rapport entre pouvoir, droit et vérité s’organise d’une façon très
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Naturally, the Commission’s compendium on national public policies recognises the
uniqueness of the early French initiatives in this regard584. Interestingly enough, it must
be recalled that the Commission did not always praise France for this pioneering social
and environmental progresses: at the request of tenderers in 1998, the Commission
brought an action before the ECJ to declare the French failure to fulfil its obligations
under Community Law because it had included social clauses (a campaign against
unemployment) among the criteria to award public works contracts585. The Directives
governing public procurement at the moment were almost exclusively centred on
economic criteria, and the Commission initially played an unclear role in the potential
extension to social and environmental issues. The ECJ followed a quite progressive
interpretation to support some EU Member States that were already including social and
environmental clauses in public contracts; not only in the above-cited case of the
Commission vs. France, but also in three important preliminary rulings regarding the
Netherlands586, Finland587 and Austria588. We have come a long way since that action
against France; now the Commission actively supports further explicit CSR clauses in
particulière… ». M. FOUCAULT : « Il faut défendre la société ». Cours au Collège de France (1975-1976), Paris 1997, Éd. Gallimard Le Seuil, pp. 22. 584 “France has implemented a unique worldwide legislative requirement [...]”, EUROPEAN COMMISSION: Corporate Social Responsibility. National Public Policies in the European Union (Compendium 2014), Brussels, June 2014, pp. 49 and 39. 585 The Court concluded that the Directive then in force “does not preclude all possibility for the contracting authorities to use as a criterion a condition linked to the campaign against unemployment provided that that condition is consistent with all the fundamental principles of Community Law, in particular the principle of non-discrimination flowing from the provisions of the Treaty on the right of establishment and the freedom to provide services”, Case C-225/98, Commission v. France, Judgement of 26 September 2000, para. 50. 586 “The condition relating to the employment of long-term unemployed persons is compatible with the Directive if it has no direct or indirect discriminatory effect on tenderers from other Member States of the Community. An additional specific condition of this kind must be mentioned in the contract notice”, Case 31/87, Gebroeders Beentjes BV, Judgement of 20 September 1988, para. 37 iii) . 587 In this case, on the environmental requirements for a city-bus service contract in Helsinki, the ECJ decided to recur to the Treaties stating, more innovatively, that environmental concerns had to underpin all EU Policies (of course, it is a judgement of 2002): “Article 130r(2) of the EC Treaty, transferred by the Treaty of Amsterdam in slightly amended form to Article 6 EC, which lays down that environmental protection requirements must be integrated into the definition and implementation of Community Policies and activities, it must be concluded that Article 36(1)a of Directive 92/50 does not exclude the possibility for the contracting authority of using criteria relating to the preservation of the environment when assessing the economically most advantageous tender”. Case 513/99, Concordia Bus Finland, Judgement of 17 September 2002, para. 57. 588 In this case, a public contract to supply electricity that included a number of requirements on renewable energy sources. “The Court therefore accepted that where the contracting authority decides to award a contract to the tenderer who submits the most economically advantageous tender it may take into consideration ecological criteria, provided that they are linked to the subject-matter of the contract, do not confer an unrestricted freedom of choice on the authority, are expressly mentioned in the contract documents or the tender notice, and comply with all the fundamental principles of Community Law, in particular the principle of non-discrimination”. Case C-448/01, EVN AG, Wienstrom GmbH, Judgement of 4 December 2003, para 33.
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public procurement589 but it should be born in mind the role of some EU Member States
that took a step forward and how the ECJ found the legal way to support it.
As is apparent, the promotion of CSR at a national level in the EU has several facets;
NAPs are insufficient to evaluate the real role of EU Member States. In some cases,
Member States have been more advanced than the Commission. NAPs (on CSR or, at
best, on business and human rights) are only another element, to be added to the
endorsement of the OECD Guidelines, the prompt and complete implementation of the
CSR-aspects of recent EU Directives, other purely legislative measures, even the daily
administration, to mention just a few. Many studies excessively focus on NAPs: we
must see the wood, not just the trees.
Leaving aside concrete examples of what is happening at the national level, it is now
relevant to make some theoretical comments. To explain the diversity of national
responses to the CSR agenda, from our institutional perspective that studies both
political and legal factors, we need to take into account the national business systems
and different varieties of capitalism. The concept of “implicit” and “explicit” CSR, first
proposed by Matten and Moon in 2008, deems to be very useful to shed light on the
current European initiatives and explain the spread of NAPs on CSR among EU
Member States, as well as a previous “hidden CSR” at a national level. To some extent,
it could be guessed when we explained the more or less remote origin of CSR in the
EU, even before being labelled as such. The concepts of implicit and explicit CSR are
worth a longer citation:590
“[C]orporations practicing implicit CSR might conduct practices similar to those of corporations practicing explicit CSR. Implicit CSR, however, is not conceived of as a voluntary and deliberate corporate decision but, rather, as a reaction to, or reflection of, a corporation’s institutional environment, whereas explicit CSR is the result of a deliberate, voluntary, and often strategic decision of a corporation. Many of the elements of implicit CSR occur in the form of codified norms, rules and laws but are not conventionally described explicitly as CSR. It is the societal norms, networks, organizations, and rules that are explicit, rather than their implications for the social responsibilities of business. It is in this sense that CSR in these systems is implicit. Where corporations comply with the law and customary ethics but do not claim distinctive authorship of these practices, they are nonetheless acting responsibly […]”.
589 See this chapter, Section 2.3 for the analysis of the current public procurement directives and the supportive role of the Commission. 590 D. MATTEN and J. MOON: “Implicit” and “Explicit” CSR: A Conceptual Framework for a Comparative Understanding of Corporate Social Responsibility”, in Academy of Management Review, Vol. 33 No. 2 (April 2008), pp. 404-424, at p. 410.
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According to Matten and Moon, some differences between the US and the EU can help
explain the evolution of the several policy options of EU Member States. For instance,
the power of the State is lower in the US and there is a greater corporate discretion in
this matter (CSR), on which the US government has been less active. The enhanced role
of private actors in the US is also visible in more evident differences concerning the
education, labour and cultural systems, added to a lower public confidence in, and
credibility of, the government compared to Europe. In finances, the US has rather
focused on shareholders whereas there have always been wider concerns in the EU,
where public authorities have historically been friendlier to the concept of
‘stakeholders’. This has marked two different paths towards CSR: in Europe, through a
consolidated institutional concern on public participation and stakeholders, and in the
US via a higher exposure to stock markets and dispersed ownership that would have
obliged to put in place earlier transparency measures to attract investors and consumers.
Moreover, in Europe corporations tend to be controlled by a smaller number of large
investors, among which banks and financial institutions predominate, apart from
depending more on the State as an economic actor.
Matten and Moon’s analysis concludes that the US, being a more liberal market
economy, has traditionally been closer to explicit CSR: companies freely choose how to
proceed and explicitly express their own original CSR, in a flexible and voluntary
manner, sensitive to a variety of corporate needs and interests before deciding how to
interact with more general societal expectations regarding business responsibility.
However, in the EU, a less liberal economy, Member States traditionally have an
“implicit CSR” on a number of issues, a CSR before CSR, which in our view continues
to condition Member States initiatives and, sometimes, their scepticism since implicit
CSR schemes look nearer to hard law approaches. In one way or another, explicit or
implicit, it is all about corporate responsibility. The concept can also be extended to the
EU: as we have seen, an implicit CSR has existed in many policies before the explicit
one emerged.
Famous corporate scandals (Parmalat in Italy, Elf Aquitaine in France, Ahold in the
Netherlands, etc.), alongside the increasing privatisation of public goods and services in
the EU, plus the impact of the financial crisis and general globalisation trends, have all
together risen social awareness of private actors and might jointly explain the recent
spread of a more explicit CSR among EU Member States. The public opinion is
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suddenly to many unexpected limits of Nation-States to face these problems: the
European implicit CSR, despite its traditional emphasis on hard regulations, deemed to
be insufficient after these recent developments, thus “encouraging a more explicit
CSR”591. The deficiencies of traditional regulations in the EU have been noted during
the crisis, when we discovered the link between remuneration systems and excessive
financial risks. The historical trend persists to some extent: for example, the general
lack of workers matters in the European CSR is the result of a long historical labour law
tradition that takes for granted an “implicit CSR” on the subject, relying on already
existing norms. In our opinion, this trend might change following to the labour system
reforms undertaken, in the heat of the crisis, by some liberal and conservative
governments in the EU, in order to “flexibilize” –as they claim– the labour market, what
could in the future make necessary a stronger explicit CSR also in this area (if the
former implicit one is really weakened and impossible to be restored). However,
workers matters are at the core of CSR in US companies.
Whatever the case, if the implementation of the CSR agenda has (promising) legal spill-
overs in the EU, it is because of a typically European historical and constitutional
preference for hard law, which is likely to become one of the main European
contributions to global CSR (with the exception of the United Kingdom as a common
law system with a longer and more liberal understanding of CSR).
EU Member States have a crucial role to build a wider consensus, which is needed both
inside and outside the EU to effectively boost CSR. We notice a great number of risks
and problems when we come down to the State level, more accentuated in highly
decentralised countries. In summary, the main problematics we have detected concern
the different speeds and understandings with respect to CSR, which is shaped by
structural political and economic factors. In general terms, Member States simply
follow the EU institutions. Of course, no anti-CSR attitude is detected, but there are no
big enthusiasms or particularly original initiatives either, even in those countries that
show a stronger commitment.
A possible way to face many of the aforementioned challenges is to task the already
existing National Human Rights Institutions with the coordination, on-going evolution 591 According to Matten and Moon, the US reaction has been the opposite: a growth of the implicit CSR with two unexpected legislative initiatives, the Dodd-Frank Act and the Sarbanes-Oxley Act, both cited elsewhere in this research. Ibíd., p. 415.
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and implementation of the CSR agenda. The potential role of NHRIs has been somehow
underestimated or simply forgotten when dealing with business and human rights592.
We can further elaborate on the advantages of NHRIs in this respect. For instance, it is a
public authority, functionally independent from the government (sometimes even
handling individual complaints), with the know-how and experience in the field to adapt
better to the EU national diversity, including legal aspects. Secondly, this would allow a
proper recognition that human rights are an essential ingredient of the definition of
CSR, as the latter would be incorporated into the areas of action of a proper human
rights institution, thus consolidating the human rights language within CSR. By the
way, the creation of new institutions (in the form of committees, interdepartmental
bodies, etc.) is not a very pragmatic solution either, provided that NHRI’s capacity to
act in their former competencies is not weakened by adding this new responsibility.
Thirdly, it can solve the usual mistrust that looms any negotiation to establish
monitoring bodies: despite being public, its functional independence according to the
Paris Principles would never be to the governments’ total satisfaction, since NHRIs
could also control public authorities and state-owned companies, or participated by the
State or providing public services. Of course, in this new capacity, NHRIs would not be
the ideal option for many companies either, as many are still advocating for the
predominance of self-regulation, without realising that the current tendency seems
hardly reversible and tends to combine self-regulation with both co-regulation and, also,
proper regulations –at least to frame the first two ones. A larger degree of regulatory
coordination between Member States is needed to make CSR work, perfectly
compatible with its voluntary nature593.
592 We mean it has been underestimated by governments –not by scientific literature. States, in their NAPs and CSR policies, don’t contemplate any special role for NHRIs in a field, business and human rights, on which these institutions could be very useful. Surya Deva promotes this idea since 2011: S. DEVA: “Corporate Human Rights Abuses: What Role for the National Human Rights Institutions?”, in H. NASU and B. SAUL (Eds.): Human Rights in the Asia Pacific Region: Towards Institution Building, London 2011, Routledge Ed., pp. 234-248. In the same sense, also see: M. BRODIE: “Pushing the Boundaries: The Role of National Human Rights Institutions in Operationalising the ‘Protect, Respect and Remedy’ Framework”, in R. MARES (Ed.): op. cit., pp. 245-272. Also generally: V. HAÁSZ: “The Role of National Human Rights Institutions un the Implementation of the UN Guiding Principles”, in Human Rights Review, Vol. 14 No. 3 (September 2013), pp. 165-187, passim. 593 A sort of ‘voluntary within mandatory’ scheme: “There is a need, clearly identifiable, for a regulatory framework to be established, if CSR is to work. This is not in contradiction with the voluntary character of CSR. On the contrary, it attaches its meaning to voluntary commitments”. O. De SCHUTTER: “Corporate Social Responsibility European Style”, in European Law Journal, Vol. 14 No. 2 (March 2008), pp. 203-236, at p. 219.
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Lobbying activities comprise by the way private self-certification systems –the
proliferation and marketization of certificates is a not very desirable development, but a
real possibility within the consultancy sector. The problem of CSR standardisation and
certification systems at a national level has materialised in the Netherlands following to
the ISO 26000. Since the ISO did not support any kind of certification, the Dutch
private-led “CSR Performance Ladder” identified a market need to adapt and change the
ISO 26000 into a certifiable system, arguing that both customers and businesses need
publicly recognisable standards which imply reputational consequences to facilitate
market rewards for responsible companies594. In our view, private and for-profit CSR
rating agencies remind us –setting aside obvious differences– the recent role of private
rating agencies during the debt markets crisis. In relation to this, NHRI’s new
competencies on Business and Human Rights could include the management (definition
and award) of CSR labels and certificates, on a non-profit basis to avoid their
privatisation and multiplication (likely to generate confusion), thus contributing to their
credibility. However, to finish with standards and certification systems, we wonder if it
would be preferable to have European labels rather than national ones, such as the EU
eco-Flower, managed by the Commission, as they would be more attractive than
national labels for different reasons: mainly, the dimensions of the common market and
the capacity of the EU to create widely recognised and credible logos that would
increase their reliability.
At the national level, NHRIs can, in sum, actively contribute to the implementation and
supervision of the international framework, within which a high degree of voluntary
actions would be maintained. NHRI’s have the potential to address many of the
practical challenges in Member States to overcome the predominance of information
and promotion strategies, pushing for more concrete developments. Therefore, the role
of Member States is essential. With a few exceptions, it can be said that EU States tend
to work reactively rather than proactively –most of the power of initiative still stays
with the EU (particularly, the Commission). In some aspects such as public
procurement Member States, however, were initially more audacious than the
Commission. The current spread of NAPs on CSR, in five cases specifically on the
UNGPs, only constitute the first step towards building a stronger international
594 L. MORATIS and A. TATANG WIDJAJA: “Determinants of CSR standards adoption: exploring the case of ISO 26000 and the CSR performance ladder in the Netherlands”, in Social Responsibility Journal, Vol. 10 No. 3 (2014), pp. 516-536, at pp. 518-519 and 525-526.
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consensus, development for which Member States deem to be of an utmost importance,
even over the EU institutional role. Finally, Member States can build on their previous
experience, their implicit CSR, to intensify without fear the human rights language in
CSR as well as caring of its external/international dimension in relation to development
policies (as it now happens at the EU level). The implementation of the CSR agenda is
therefore conditioned by a number of problematic factors that influence the outputs at a
national level, even though there are identifiable opportunity niches.
3.3.2. National guidelines and main initiatives595
NAPs on business and human rights are being elaborated at a very lower speed than
NAPs on CSR, but they seem a more comprehensive option or, at least, a better decision
since it emphasises the centrality of human rights in this topic. For the time being, only
the United Kingdom, the Netherlands, Denmark, Finland and Italy have published their
NAPs on business and human rights. Acknowledged the fact that Member States’ CSR
performance depends on many other factors, and that the need of two separate NAPs is
discussable in view of the debate above, the fact of being the first five countries with
NAPs on the UNGPs can be a pretext for studying more in detail their policies.
This five NAPs strictly follow the three-level structure of John Ruggies’ Framework
(protect, respect and remedy). The contents, however, are more OECD-informed while
the WTO and ILO have a very limited presence. They can be defined as policy papers,
the result of ministerial working groups. The main institutions involved at a national
level are:
- In Finland, the strategy is governed by the Ministry of Employment and the
Economy. Within this Ministry, the Committee on Corporate Social
Responsibility is an independent advisory body composed of government
authorities and CSOs’ representatives; its tasks comprise the evaluation and
development of CSR policies. The same Committee functions as the Finnish
NCP of the OECD Guidelines596. The NAP, published in October 2014, is
595 This section is built upon the information of the five NAPs on the UNGPs, all available at: http://ec.europa.eu/growth/industry/corporate-social-responsibility/in-practice/index_en.htm 596 The Committee was created in 2008 following to the Finnish Government Decree on the Committee on Corporate Social Responsibility, Helsinki, 4 December 2008, Section 1 (position and duties) and Section
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the result of a Government Resolution published in November 2012, in
which the involvement of other Ministries is foreseen, in particular,
Finances, the Environment, Social Affairs and Foreign Affairs.
- In Denmark, the Danish Council for CSR597 leads the way. Its President is
elected by the Minister for Business and Growth while the rest of its
members are independent representatives of CSOs such as trade unions,
industrials, Amnesty International or the national Red Cross. Apart from the
Ministry for Business and Growth, the Ministry for Trade and Development
is also involved. However, the Danish NCP for the OECD Guidelines is a
separate secretariat, the “Mediation and Complaints-Handling Institution for
Responsible Business Conduct”, also under the same Ministry for Business
and Growth, but within the Danish Business Authority. The strong point of
the Danish NCP is to be the only established by law598 and with ex officio
powers of investigation, although this capacity has not been used so far. The
Danish institutional building is the strongest point of their CSR, despite the
fact that the NCP could be part of the CSR Council (like in Finland). In any
case, Denmark is probably the Scandinavian country where the
Government’s role has been larger in promoting CSR, to discipline
businesses “without forcing the issue” and a powerful agenda-setting power
as well as influence on societal expectations599. Maintaining the voluntary
character of CSR regarding its contents, Denmark seems to support a
government-driven framework, unlike Finland or Sweden –less
enthusiastically active– and more similarly to Norway, where “the
government does not seem inclined to accept the ‘retreat of the state’
thesis”600.
2 (composition). Available at: https://www.tem.fi/en/enterprises/corporate_social_responsibility_(csr)/committee_on_corporate_social_responsibility 597 See http://csrcouncil.dk/ 598 Act No. 546 adopted by the Danish Parliament 18 Junes 2012. See: http://businessconduct.dk 599 The Danish policy might have just a few direct effects and be centre on “indirect (agenda-setting) effects”, it cannot be denied to be one of the most advanced countries in the promotion of CSR. S. VALLENTIN: “Governmentalities of CSR: Danish Government Policy as a Reflection of Political Difference”, in Journal of Business Ethics, Vol. 127 No. 1 (March 2015), pp. 33-47, at pp. 36 and 45 (citations). 600 A. WELLE-STRAND and M. VLAICU: Business and State Balancing International Development Agendas –The Case of Norwegian CSR”, in Journal of Politics and Law, Vol. 6 No. 3 (2013), pp. 103-116, at p. 109.
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- In the UK, the Ministry for Foreign and Commonwealth Affairs was
responsible for the Plan and the Minister presented it to the Parliament in
September 2013601. The technical direction is provided by the Department
for Business, Innovation and Skills, within which we find the British NCP to
monitor the implementation of the OECD Guidelines. However, in contrast
to Denmark, the British NCP is made up of civil servants supervised by the
Steering Board. Despite this, the British approach seems a good combination
between the internal and external dimension of CSR.
- In the Netherlands we also find a similar emphasis on the international
vocation of the NAP, precisely published by the Ministry of Foreign Affairs,
which also houses the Dutch NCP (created in 2007 and extended in 2011).
The Government clearly rejects the idea of the NCP having ex officio
powers602; however, according to a case study published by OECD Watch, a
recent complaint involving Royal Dutch Shell would have raised important
doubts about the NCP’s guarantees in terms of transparency and
predictability603. In June 2014 a new government decree only strengthened
the NCP competence to conduct wide researches and regular consultations
sector by sector, apparently without news about the complaint mechanism604.
- The Italian “Foundations of the Italian Action Plan on the UNGPs” are, as
its name indicates, a preliminary policy paper that should not be judged
according to the same criteria. Otherwise, it would be difficult to justify its
length (80 pages) and rhetoric style. In any case, it constitutes a prime
example of a problem against which we warned in the previous section:
excessively crisis-motivated and internally-oriented NAPs that ultimately
601 GOVERNMENT OF THE UNITED KINGDOM OF GREAT BRITAIN AND NORTHERN IRELAND: Good Business. Implementing the UN Guiding Principles on Business and Human Rights, Presented to the Parliament by the Secretary of State for Foreign and Commonwealth Affairs by Command of Her Majesty, September 2013, Cm 8695. 602 “The government is not in favour of the Dutch NCP having similar, unconditional powers to carry out investigations”: MINISTRY OF FOREIGN AFFAIRS (Netherlands): National Action Plan on Business and Human Rights, April 2014, p. 35. 603 Two NGOs (Amnesty International and Fiends of the Earth Netherlands) filed a complaint to the Dutch NCP on an alleged violation of the OECD Guidelines following the diverse oil-spills in the Niger Delta. Shell headquarters firstly derived responsibility to the subsidiaries until the NCP obliged them to provide information since the Guidelines include subsidiary structures. However, the dialogue and mediation did not have any positive output and the environmental threats remain unaddressed. See: http://oecdwatch.org/cases/Case_197 604 Unfortunately, this decree is only available in Dutch. See: http://www.oecdguidelines.nl/ncp
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distort CSR, including details around completely off-topic issues such as
religious minorities, railway system, poverty, fight against drug addiction,
etc. (as if it was a general report for a UN monitoring body). As explained,
CSR is not about complying with already existing human rights treaties
ratified by EU Member States; it is rather about preventive and horizontal
strategies to foster human rights in their particularly complex interaction
with business activities. This unfocused approach is confirmed by the
presence of the Italian NCP within the Ministry of Economic Development,
who governs the incipient CSR policy in Italy.
Problems of understanding, however, are not exclusively Italian. The British NAP is
proud to enumerate the different international human rights conventions ratified by the
UK, but it forgets that it has not ratified any of the Optional Protocols of the Civil and
Political Rights and Economic, Social and Cultural Rights Covenants605, which are
essential to ensure the vertical effects of human rights, in other words, States’
accountability vis-à-vis the respective UN Committees. Denmark, to give another
example, has ratified the Optional Protocol of the ICCPR, but not that of the ICESCR,
obviously relevant in terms of business and human rights. It is curious to read in the
Danish NAP a reference to how they “actively tak[e] part in the Universal Periodic
Review process of the United Nations”606, which is largely identified as the weakest
human rights monitoring mechanism since it is an inter pares procedure607 with a more
than doubtful significance in terms of business and human rights. The only link with the
UNGPs is that, even at the first level of Ruggie’s Framework (on States’ duties), basic
failures –or omissions– are still visible, undesirably within the EU.
The common objective of all NAPs is to present some actions undertaken, without
many details on legal issues, and the future developments foreseen. The participation in
incident-based programs, with the recurrent examples of Bangladesh and Myanmar, are
a commonplace that does not, in substance, add anything new. The lack of technical and
605 For the state of signatures and ratifications see: https://treaties.un.org. 606 DANISH GOVERNMENT: Danish National Action Plan. Implementing the UN Guiding Principles on Business and Human Rights, March 2014, p. 11. 607 Indeed, the Universal Periodic Review is least advanced international human rights mechanism: more than a monitoring body, it might be defined as a body aimed at the promotion of human rights inter pares (States). It has, therefore, a political-diplomatic character and more general goals. C. VILLÁN DURÁN and C. FALEH PÉREZ: Manual de Derecho Internacional de los Derechos Humanos, Madrid 2012, Universidad de Alcalá, pp. 132-135.
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legal details makes us think of general policy papers or political statements rather than
true ‘action plans’ with objectives and deadlines, whereas the different strategies
designed by the Commission were far more concrete.
All five countries insist on their active engagement in the negotiations and decision-
making processes in the international fora and in Brussels, but not always in the same
direction: Finland expresses a clear disagreement with the on-going discussion on the
need of a new international treaty on business and human rights608, within the
framework of the UN Human Rights Council. The Netherlands stress that “there is too
little international support for an international, legally-binding instrument”609. Only
Denmark seems more supportive of extraterritorial obligations for companies and,
interestingly, proposes that the leader of this negotiation should not be the UN or the
EU, but the Council of Europe610. Both the UK and Netherlands insist on more liberal
understandings of CSR, private grievance mechanisms based on mediation and
facilitation, encouraging their companies to apply the same domestic standards in third
countries, but with no supervision or consequences. At the same time, all countries
except Denmark recall the debate on the definition of “due diligence”. In our view,
when academic discussions make their appearance on the political scene, it is likely to
reflect the lack of political will rather than a genuine International Law concern. Of
course due diligence is an indeterminate legal concept611. The problem of clarifying the
concept of ‘due diligence’ is repeated by the Netherlands, the UK and Finland; we will
just leave an open question: in terms of CSR, is it more appropriate to wonder “What is
sufficient” rather than “How much can be done?”
608 “It has been suggested within the UN Human Rights Council that a convention on the human rights liabilities of companies be made between governments, but Finland has not recommended this. In international human rights bodies, Finland has emphasised the development related to due diligence”. MINISTRY OF EMPLOYMENT AND THE ECONOMY –Labour and Trade Department (Finland): National Action Plan for the implementation of the UN Guiding Principles on Business and Human Rights, October 2014, Publication 46/2014, p. 14. 609 It further states that “extraterritorial application alone is not enough. A court judgement must also be enforceable, and it is not up to the Netherlands to decide for other countries whether this is possible. The government is therefore not convinced that legislation with extraterritorial impact will contribute to preventing human rights abuses by foreign companies in the countries in which they are active”. MINISTRY OF FOREIGN AFFAIRS (Netherlands): National Action Plan…, op. cit, p. 39. 610 “The Danish Government wishes to engage in the discussion on extraterritorial legislation as roclaimed in the UNGPs and as recommended by the Danish Council for CSR. […] The Government has recommended that the Council of Europe should take the lead on the issue of extraterritoriality”. DANISH GOVERNMENT: Danish National Action Plan… op. cit., p. 15. 611 We have signalled some of its problems in the general part of this study, see pp.
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The existing NAPs on the UNGPs further show that it is now quite commonplace in the
EU to refer to the social responsibility of state-owned companies or controlled by the
State. To this day, state-owned companies constitutes a relatively limited concept: it
should be considered to extend CSR to ‘State-participated’ companies, not necessarily
with the majority of the shares, and even to companies in charge of public services,
which is an increasing reality in the EU (and at a global scale). In this sense, the British
NAP on the UNGPs is the most complete when it declares its commitment to “review
the degree to which the activities of UK State-owned, controlled or supported
enterprises, and of State contracting and purchasing of goods and services, are executed
with respect for human rights”612, what could have an inspiring role.
In spite of all the limitations described so far, we have also found useful initiatives
shared by some countries: both the Netherlands and the United Kingdom, with a high
exposure to international trade and supply chains, have developed instruments to
provide the private sector with country assessments concerning the main human rights
risks depending on the regions and sectors. In practice, the Dutch “CSR Risk Check” is
an online tool, analytical and visual, to show this risks in function of diverse criteria
(child labour; pollution; discrimination and gender issues; etc.). Similarly, the British
“Overseas Business Risk (OBR) Service” gives the same type of information on the
most usual problems detected in countries where the UK trade and investment has a
presence, adding another interesting “Business and Human Rights Toolkit” specifically
addressed at officials. The UK has also funded an online hub in six languages to
promote the UNGPs. Similar sector risk analysis are planned or under development in
Finland and the Netherlands.
Related to this, a Dutch legislative proposal contemplated guarantees on access to
information for the general public, making it compulsory for companies to answer any
request regarding the origins and production phases of their products or services613.
Technically feasible, it remains in abeyance as the Dutch government considers it
should not be enacted yet: “the government does not feel that this is the right time to
enact such legislation”, in part due to its high costs. Regardless of the final decision, the
612 Emphasis added. GOVERNMENT OF THE UNITED KINGDOM OF GREAT BRITAIN AND NORTHERN IRELAND: Good Business. Implementing… op. cit., p. 11. 613 The so-called “Production and Supply Chain Information (Public Access) Act (WOK). MINISTRY OF FOREIGN AFFAIRS (Netherlands): National Action Plan…, op. cit, p. 31.
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proposal has a clear potential to increase transparency and strengthen the interest of
companies to implement CSR and avoid serious reputational damages.
Finally, the UK has also passed the Bribery Act in virtue of which companies are held
responsible for acts of bribery regardless of the country in which they occur, showing
the important links between business activities, corruption and human rights614.
Transparency, access to information and accountability are key drivers of the fight
against corruption, which is recognised to be linked with human rights abuses in
developing countries and, therefore, should not be neglected in the intertwined design of
public/private and internal/external strategies of CSR.
In conclusion, alongside the delays, challenges and divergent opinions among Member
States, we have detected interesting policy options too. Sometimes, Member States have
been more audacious than the Commission, which has taken over after 2011 with its
Renewed Strategy. The following table summarises the most progressive initiatives
detected at a national level.
Table No. 2: National Policies in the EU: screening the best initiatives
614 OHCHR: Good Governance Practices for the Protection of Human Rights, New York – Geneva 2007, United Nations Publications (HR/PUB/07/4), pp. 59-79.
MAIN ISSUES OF NATIONAL POLICIES
BEST POLICIES IDENTIFIED
Definition of CSR
All endorse the Commission’s definition and the UN and OECD texts. Only the UK explicitly clarifies that “it is not the same as philanthropy or social investment”. (All lack of ILO and WTO related aspects). The UK and Netherlands more heavily rely on private-led initiatives.
Guidance for Companies
Netherlands: “CSR Risk Check”, tool including comprehensive country assessments on human rights’ risks in third countries, sector by sector.
UK: Similarly the “Overseas Business Risk Services”; the “Business and Human Rights Toolkit” (for officials); funding online hub in 6 languages (share companies experiences and inform on the UNGPs).
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Grievance mechanisms and NCPs
Denmark: NCP established by law and with ex officio investigation powers. President appointed by Minister for Business and Growth, but the rest of members are independent experts from NGOs and CSOs. The Danish “Mediation and Complaints-Handling Institution for Responsible Business Conduct” is a non-judicial but state-based institution governed by law.
Finland: the fact that the same Committee on CSR constitutes the Finnish NCP, avoiding the multiplication of institutions.
Extraterritorial obligations
Only Denmark supports the negotiations and shows an opened attitude, advocating for the leadership of the Council of Europe.
Public Companies
Only the UK goes beyond the restrictive concept of State-owned companies and plans to introduce CSR into “controlled or supported enterprises, and of State contracting and purchasing of goods and services”.
Implementing EU initiatives on CSR
(early assessment)
- Non-financial reporting requirements: France initiatives following to the “Grenelle II Law” (2010). Transposition deadline of Dir. 2014/95/EU expires 6 December 2016.
- UK Bribery Act : British companies are liable for acts of bribery committed anywhere in the world
- All EU Member States have transposed Directive 2013/36/EU on remunerations and gender balance in financial institutions.
- 19 EU Member States have NAPs on CSR; only 5 specifically on the UNGPs. Almost all EU Member States have several information and promotion initiatives (partnering, forums, etc.)
- 24 Member States have adhered to the OECD Guidelines on MNEs.
- None of the EU Member States have transposed arts. 41-46 of Dir. 2013/34/EU obliging the extractive industry to report on payments to governments.
- Public Procurement Reform pending: deadline 18 April 2016 (Dirs. 2014/24/EU and 2014/25/EU).
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CHAPTER IV
The potential of the EU’s contribution to global CSR
4.1 The potential of soft law in the EU
4.1.1. The initial guidance of the ECJ: introducing the debate
In assessing the potential of the EU initiatives on Corporate Social Responsibility, it is
fundamental to undertake an analysis of soft law instruments in the EU. There is a broad
range of such instruments: from Recommendations and Opinions, more widely used, up
to a plethora of Declarations, Resolutions, Action Programmes and Plans, Guidelines,
Communications of the Commission, Conclusions of the Council, and inter-institutional
arrangements, as we have seen in chapter III related to the emergence of CSR in the EU.
It is well known that soft law is not limited to CSR but has spread to all EU law fields.
Recommendations and Opinions are the only soft instruments provided for by article
288 TFEU, adding that they “shall have no binding force”, what reveals to be a rather
insufficient description given that there is a good number of other unmentioned acts
(like guidelines) that would also fall within the scope of that article.
As it happens with CSR, we lack of systematic and general studies on soft law in the
EU. The available literature agrees in maintaining Snyder’s early definition (1993) so
far as it conforms to the initial guidance of the ECJ: “rules of conduct which in principle
have no legally binding force but which nevertheless may have practical effects”615, to
what we can add that, obviously, it goes further than mere ‘rules of conduct’,
comprising political aspirations, interpretations of hard law provisions and a wide range
of other situations that we classify below. Snyder already noticed the “hardening” of
soft law once it passes through the filter of the ECJ, when the Commission takes it back
to apply it.
615 F. SNYDER: “The Effectiveness of European Community Law: Institutions, Processes, Tools and Techniques”, in The Modern Law Review, Vol. 56 No. 1 (January 1993), pp. 19-54, at p. 32.
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The starting point of this debate has some unavoidable benchmarks very recurrent in the
available literature on the subject, generally obsessed with measuring the legal force
from positivist paradigms rather than gauging its value from a pragmatic and realistic
approach, closer to what happens in the field. This is why we introduce the debate on
the potential of soft law taking the initial guidance of the European Court of Justice as
our starting-point. There is no doubt on the importance of Grimaldi, where the ECJ
accepted that soft law had to be taken into consideration to inform national Courts
decisions. Without giving further details on how this can be done, the Court
distinguished at first sight two functions of soft law, to complete and to interpret:
“The national Courts are bound to take recommendations into consideration in order to decide disputes submitted to them, in particular where they cast light on the interpretation of national measures adopted in order to implement them or where they are designed to supplement binding Community provisions”.616
Another off-cited example is Polska Telefonia Cyfrowa (PTC), a polish phone company
that challenged the imposition of new regulatory obligations following to 2002
Guidelines concerning electronic communications networks and services. The question
of this preliminary ruling was if such guidelines could be relied upon against
individuals, even if they hadn’t been translated into polish. In our view, the reasoning of
the Court has three steps. Quite surprisingly, the ECJ basically explains that there is no
“general principle of EU Law under which anything that might affect the interests of an
EU citizen must be drawn up in his language in all circumstances” 617, so we understand
the lack of translation is not allegeable to preclude the application of soft law
instruments (which most of the times are not available in all EU languages). The ECJ
secondly states that the guidelines under discussion are not reliable upon against
individuals because their intended recipients are national regulatory authorities (NRA).
However, at the end the Court concludes that nothing prevents the polish regulatory
authority referring to those guidelines in a decision “by which that NRA imposes certain
regulatory obligations on an operator”618. This solution was reached only after a textual
analysis that in no case precluded the possibility that Guidelines have legal effects.
616 Emphasis added. Case C-322/88, Grimaldi v. Fonds des maladies professionnelles, Judgement of 13 December 1989, para. 18. 617 Case C-410/09 Polska Telefonia Cifrowa, Judgement of 12 May 2011, para. 38. 618 Ibíd., para. 39.
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In other words, the Court implicitly acknowledges that soft law might have legal effects
in some cases. These instruments might be unlikely to generate direct obligations
allegeable against natural or legal persons, but they can indirectly and lawfully affect
their rights and obligations (for example, through national enacting institutions),
regardless of available translations and publication. In PTC, the Court did not shed
much more light but therefore clarified a key difference between ‘legally binding force’
and ‘legal effects’, the latter including in practice “legally binding effects”619. The
practical translation, again, is that the legal situation of natural and legal persons can be
affected in terms of their rights and obligations, but mostly through indirect
mechanisms.
Dansk Rörindustri et al. against the Commission is another seminal and recurrent case
in the literature on this subject. We face nine companies operating in the district heating
sector that produce or market pre-insulated pipes for that sector, who challenge a fine
for anti-competitive conducts imposed by the Commission according to the ‘Guidelines
on the method of setting fines imposed pursuant to Article 15(2) of Regulation 17 and
Article 65 of the ECSC Treaty’. The Grand Chamber reaffirms, one by one, in an
exhaustive and exceptionally long judgement, the arguments held by the Court of First
Instance. Relevant to us is the criteria followed to determine the legality of those
‘Guidelines’: “in setting out in the Guidelines the method which it proposed to apply
when calculating fines imposed under Article 15(2) of Regulation No. 17, the
Commission remained within the legal framework laid down by that provision and did
not exceed the discretion conferred on it by the legislature”620, what leads to the
rejection of all pleas in law: against the legality itself of the Guidelines (lack of
competence of the Commission), and against the pleas alleging a breach of the
principles of legitimate expectations and non-retroactivity. However, these problems
related to legal certainty persist and are not negligible, especially when soft law has an
interpretative character of the current legislation, as well as the problem of available
619 O. STEFAN: “European Union Soft Law: New Developments Concerning the Divide between Legally Binding Force and Legal Effects”, in The Modern Law Review, Vol. 75 (2012) No. 5, pp. 879-893, at pp. 885-887. 620 Joined Cases C- 189-02 P, C-202/02 P, C-205/02 P to C-208/02 P and C-213/02 P, Dansk Rorindustri et al. v. Commission, Judgement of 28 June 2005 (Grand Chamber), para. 252.
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translations621 and the due publicity of norms. Despite these pertinent doubts, the Grand
Chamber absolutely defends such soft instruments provided some conditions:
“In adopting such rules of conduct and announcing by publishing them that they will henceforth apply to the cases to which they relate, the institution in question imposes a limit on the exercise of its discretion […] It cannot therefore be precluded that, on certain conditions and depending on their context, such rules of conduct, which are of general application, may produce legal effects”.622
A close analysis of ECJ’s settled case-law is Stefan’s comprehensive thesis in the area
of competition law and State aids, where soft law is widespread, in which the author
shows that EU Courts use both hard and soft norms, very particularly to clarify the
interpretation of hard law623. The scholarship’s interest has mainly targeted this
phenomenon: how Courts confirm the interpretative character of soft instruments.
Another way to express the same difference between legal force and legal effects would
be to use the expressions ‘rules of law’ and ‘rules of practice’, reminding Snyder’s
reference to ‘practical effects’. After Stefan’s quantitative and qualitative scrutiny of
soft law in the field of competition law and State aids, it appears that there is some
judicial recognition of the role of soft law in its interaction with classic norms, detecting
feedbacks between them that better approximate the complexity and heterogeneity of
any regulation in order to abandon monolithic visions of law. We have seen that the
ECJ essentially checks if “soft law instruments remain in the boundaries fixed by hard
law”624, and at the same time, it can be beneficial to the extent soft law can detail
previous regulations and thus reduce the Commission’s margin of discretion625, as we
have also noted in Danks Rorindustri et al..
More recently, and moving to a different law-field, the General Court has confirmed
this approach: while ruling the annulment of an aspect of the Eurosystem Oversight
Policy Framework published by the ECB. Once again, it was acknowledged that soft
instruments emanating from EU institutions can perfectly have legal effects and
621 The problem of available translations, an obligation rejected by the Court as we have seen since the PTC judgement for soft instruments, could be argued from article 4 item 2 of TEU (equality of Member States) together with the principles of democracy and legal certainty. 622 Ibíd., para. 211. 623 O. STEFAN: Soft Law in Court. Competition Law, State Aid and the Court of Justice of the European Union, The Netherlands 2013, Wolters-Kluwer Law International, 367 pp., passim. However, the limitation of Stefan’s work is that it mainly focuses on soft law when it has an interpretative function of hard norms, leaving aside many other manifestations of soft instruments. 624 Ibíd., p. 142. 625 Ibíd., p. 179.
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subsequently be under the Court’s scrutiny: “ [A] n action for annulment is available in
the case of all measures adopted by the institutions, whatever their nature or form,
which are intended to have legal effects”626. A meticulous textual analysis was
undertaken to assess the context, the level of specificity, the wording, ultimately, the
content and scope of the policy framework to finally conclude its originality with regard
to the regulation it was supposed to clarify and, above all, the unlawful addition of a
requirement absent in the parent-regulation (to be located in a Member State party to the
Eurosystem for central counterparties involved in the clearing of securities). This
additional requirement surpassed the boundaries of hard law, then suggesting some kind
of hierarchy in their interaction. The Court is consistent with its previous case-law even
if it seems an innovative approach to the extent it expressly “take[s] into account the
perception of the Policy Framework”627. This rather psychological or anthropological
way of thinking of the Court is perfectly legitimate and understandable to overcome the
white and black logic of legal positivism, despite the eventual unease of lawyers, in
view of the increasing complexity of EU integration. Soft law, if reasonable and within
the hard law limits, may have unquestionable effects, even if indirectly. Whenever it
deems to be necessary, the ECJ has pronounced itself on soft law. The ECJ therefore
supports our pragmatic view under which substantive criteria have to be considered
beyond purely formal ones when assessing the potential of these new instruments,
reducing the prominence of rather classic nomen iuris discussions628. It seems logical
that material reality prevails over formalities: any legal order takes place in a social
setting in which coercions can be institutional, but also practical, if we assume the
contribution of legal anthropology: social and market coercions are not to be
neglected629.
626 Emphasis added. Case T-496/11, United Kingdom of Great Britain and Northern Ireland v. European Central Bank, Judgement of 4 March 2015, para. 30. 627 Ibíd., para. 42. 628 Settled case law to reaffirm the ECJ judicial review of any act with “legal effects” regardless of its formal denomination has its origin in case 68/86, United Kingdom of Great Britain and Northern Ireland v. the Council, Judgement of 23 February 1988, as commented by U. DRAETTA: Elementi di diritto dell’Unione Europea. Parte Istituzionale, ordinamento e struttura dell’Unione Europea, Milano 2009, Giuffrè Ed., pp. 278-279. Also see: G. STROZZI and R. MASTROIANNI: Diritto dell’Unione Europea. Parte Istituzionale, Torino 2011, G. Giappicheli Ed., pp. 296-300. 629 F.M. ZERILLI: “The Rule of Soft Law, an Introduction”, in FOCAAL –Journal of Global and Historical Anthropology, Vol. 56 (2010) No. , pp. 3-18, at p. 11. The “Bologna process” to restructure higher education in the EU and adapt it to the “3+2 system”, is a very clear example given by the author to show how coercion exists beyond hard norms: the text signed in Bologna was a simple declaration that usually never leads to hard obligations. Ibíd., p. 5.
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To relatively reassure lawyers and concerned civil society, some conclusions can be
drawn out of this initial guidance of the ECJ. First, the Court seems to distinguish quite
clearly between hard and soft law, putting them in context when required. Secondly, it
seems that there is the possibility of judicial scrutiny of these soft law instruments if
necessary (admissibility criteria are to be understood under this flexible substantive
approach on legal effects without fearing formal considerations, so that soft law will not
escape the control of the ECJ).
Finally, while the “legal effects” of soft law are recognised, abuses have generally been
annulled so we infer that soft instruments must operate within the framework of the
existing legislation, refraining from going further. It is finally true that its effects can
indirectly touch the rights and obligations of legal and natural persons, but rarely in a
direct way. Notwithstanding the importance of the ECJ initial guidance, we need to be
aware of its limits as it focuses on a very particular expression of the soft law
phenomenon, its interpretative function which, albeit a significant part, it actually
constitutes only one of its many manifestations.
4.1.2. Consolidation and taxonomy of soft law in the EU
To de-dramatize and expand the picture of this debate it is worth looking back at the
origin and consolidation of soft law in the EU. As it has been stated in the general part
of this research, soft law is nothing new neither to the EU nor to any international
organisation. The EU law-making processes have considerably evolved, overcoming the
Community method. The legislative procedures were already altered with the new
cooperation procedures in virtue of the Single European Act in 1987, then with the
introduction of the Co-decision (I) following to the Treaty of Maastricht (1992),
completely rearranged with the Treaty of Amsterdam in 1997 (so-called Co-decision II).
The legislative role of EU institutions correspondingly changed, while the EP was
gaining power.
The definitive boost of soft law in the EU comes in the 2000’s after the aforementioned
Lisbon Council: the Open Method of Coordination marks a before and an after,
formalising soft law procedures through flexible strategies and programmes,
implementation timetables, developing both qualitative and quantitative indicators, and
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completing the overall with periodic peer reviews as a sort of monitoring mechanism
via reporting commitments630. The OMC institutionalises what we would call ‘soft
procedures’: Member States and EU institutions have to work together to identify
common objectives and evaluate them through statistics, guidelines and indicators, and
the Commission has a general supervision over the coordination to ensure the exchange
of information and best practices, affecting mainly to education, employment and social
policies in general, but later on extended to other policy making. It normally agreed that
the output will rarely be a binding act (directives, regulations or decisions).
Particularly thought for social issues and later extended to other policies, the OMC
allowed maintaining an intense inter-governmental dialogue, while reaching some basic
common understandings and apparently fluidizing the EU multilevel governance.
Through the OMC, like a kid with a new toy, the EU definitely embraced soft law as
new predominant tool for governance631. The White Paper on European Governance
reinforced this mentality in the sense that the EU “must renew the Community method
by following a less top-down approach and complementing its policy tools more
effectively with non-legislative instruments”. It further explains that “legislation is often
only a part of a broader solution combining formal rules with other non-binding tools
such as recommendation, guidelines, or even self-regulation within a commonly agreed
framework” 632.
An Action Plan dated June 2002633 continued this trend, responding to a context in
which the enlargement, the difficulty to manage the acquis and the profusion of EU
Law, together with legitimacy concerns, were pointing to the need of improvements of
the legislative procedures, reducing the quantity and raising the quality634. We leave
aside the ideological debate around this “do less, do better” spirit and whether it is a
reflection of a deregulatory neo-liberal choice or, simply, a recognition of the
complexity of EU Law and the desire of making it more manageable.
630 Presidency Conclusions, Lisbon European Council, 23 and 24 March 2000, para 37. 631 E. O’HAGAN: “Too soft to handle? A Reflection on Soft Law in Europe and Accession States”, in Journal of European Integration, Vol. 26 (2004) No. 4, pp. 379-403, at pp. 382-4 and p. 397. 632 COM (2001) 428, 25 July 2001, European Governance. A white paper, pp. 4 and 20. 633 COM (2002) 278 FINAL, 5 June 2002, Action Plan: Simplifying and improving the regulatory environment, p. 7. 634 It is the spirit of a “new legislative culture” and “new governance modes”, L. SENDEN: “Soft Law, Self-Regulation and Co-Regulation in European Law: Where Do They Meet?”, in Electronic Journal of Comparative Law, Vol. 9.1 (January 2005), www.ejcl.org, 26 pp., at pp. 5-11.
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We have to wait until 2003 to read the basic text, the Interinstitutional Agreement on
better law-making, where self-regulation and co-regulation are finally defined: both
involve private and public actors and the difference is to what extent. In the case of self-
regulation, the public role is smaller serving as a political inspiration without
compromising the future stance of institutions, only at a very general level supervising
its compliance with the Treaties or other general guidance and information of best
practices635. On the other side, in the case of co-regulation public authorities provide
with the legal framework –leaving room for concrete implementation but clearly within
the margins of legislation, by way of complement. This agreement constitutes an utterly
important step in the recognition of “alternative methods of regulation” and their
usefulness, provided of course their consistency with EU Law. However, we shall
highlight that “[t]hese mechanisms will not be applicable where fundamental rights or
important political options are at stake or in situations where the rules must be applied
in a uniform fashion in all Member States” 636.
The political background of the aforementioned documents is the EU looking forward
to regaining social acceptance and legitimacy, as the key words of these documents are
simplification, coordination, raising quality or reducing the volume of legislation, better
implementation and transpositions, transparency and accessibility, etc. In any case, the
boom of soft law precisely came since the 2000’s. A very common concern of EU
institutions has been to enhance public participation in the decision-making processes,
regarding both policy-making and law-making; the path is full of traps, of course, as we
might realise that the most powerful and economically interested will be more likely to
raise their voice. However, thanks to the new possibilities of the digital era, socio-
economic gaps can be less disabling in terms of access to information, public
participation and formation of civil society organisations for particular purposes.
In view of the success and extension of soft law instruments since the 2000’s, another
problem is to determine its outcome, also in order to evaluate its potential. In some
cases it is a pre-legislative soft law, such as the numerous Communications of the
Commission or the Green Paper, where the institutional impulse is likely to introduce 635 “Self-regulation is defined as the possibility for economic operators, the social partners, non-governmental organisations or associations to adopt amongst themselves and for themselves common guidelines at European level (particularly codes of practice or sectoral agreements)”. European Parliament, Council and Commission: Interinstitutional Agreement on better law-making, OJ 2003, C 321/01, para 22. 636 Ibíd., para. 17.
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the subjects into the political agenda637. On the other hand we find para-legislative
initiatives aimed at supporting the pre-legislative agenda via the creation of a favourable
environment based on the corporate awareness and extension of voluntary good
practices. Part of this institutional work is likely to become, sooner or later, binding
instruments as grows the international consensus in this respect (or at least, at a regional
level).
More systematically, we might divide soft law into three main categories following the
early but absolutely accurate terminology of Prof. Daniel Thürer638. First of all, pre-law,
as said before, is the most likely to crystallise into a legal act, but alongside its eventual
preparatory character, it also has an informative function (such as many
communications). We then find interpretative and decisional soft law, intended to give
further details on the exact application of previous EU law, in this sense a sort of post-
law, with which the Court has dealt confirming it despite the risk of adding provisions
absent of the parent-legislation, as we have seen above; c) thirdly we find para-law,
always according to Thürer’s terminology, which expresses some kind of political will
tending to create an agenda, a favourable climate of opinion, sometimes formally
(recommendations, explicitly covered by art. 288 TFEU) and many times informally
(declarations, conclusions, codes of conduct).
The taxonomic efforts include a different perspective that well deserves some comments
as it completes this functional perspective. Besides the ‘pre/post/para –law’ functions,
we have three other variables to be taken into account: the type of norm, the type of
obligation and the type of enforcement, in a way that any of them can be hard or soft,
understanding law as a continuum. This enables us to discover some captivating
categories. We find hard norms apparently including hard obligations that actually
637 P. DE LUCA: « La responsabilité sociale des entreprises en Europe », in Comparazione e diritto civile, Novembre 2012 (ISSN 2037-5662), pp. 9-10. Accesible at: http://www.comparazionedirittocivile.it (Relazione presentata al convegno italo-francese Il nuovo diritto internazionale degli investimenti tenutosi a Napoli il 26 maggio 2008 presso l’Università Federico II). 638 The first original work in this regard, which has inspired all the subsequent literature was: D. THÜRER: “The role of Soft Law in the Actual Process of European Integration” in O. Jacot-Guillarmod and P. PESCATORE (Eds.): L’avenir du libre-échange en Europe: vers un Espace économique européen?, Zürich 1990, Schultess Polygraphischer Verlag, pp. 131-133. Not surprisingly, the same author was tasked to summarise the concept in the prestigious Max Planck Encyclopedia of Public International Law. See D. THÜRER: “Soft Law”, in Max Plank Encyclopedia of Public International Law, www.mpepil.com, March 2009. This taxonomy, among the many available in the literature, is the most extended and functional. For a good summary of these concepts that emerge from the three main functions of soft law see: L. SENDEN: Soft Law in European Community Law, Oxford 2004, Hart Publishing, pp. 119-120.
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derive into very soft enforcement mechanisms, such as the Treaty on Stability,
Coordination and Governance: in 2002-2003 Germany and France were not sanctioned
for violating the debt and public deficit objectives, as the enforcement depended upon
the arbitrary willingness of the contracting parties; enforcement mechanisms have only
been strengthened after the 2012-13 reforms639. We also detect hard norms with no
enforcement at all: the Common Foreign and Security Policy (CFSP) is a corpus of
legally binding acts (arts. 28 and 29 TEU) but compliance of Member States with the
CFSP is –in most of its aspects if not entirely– excluded of the ECJ jurisdiction. This is
an interesting invitation to demystify hard norms, from a formal point of view, as
everything finally depends on the obligations and on the way they are intended to be put
in practice. According to this taxonomy we also have soft law leading to hard
obligations, for example when this soft law corresponds to a post-law function, i.e.,
interpretative and decisional.
In summary, if we combine the classification based on the functions of soft law
(pre/post and para-) and the analysis centred on the dialectic between types of
obligations and enforcements, we observe that soft obligations with hard enforcement
generally correspond to post-law functions (its interpretative character). Sometimes, soft
law instruments with a post-law character might present hard obligations with hard
enforcement mechanisms, but we have seen that these situations are more likely to be
seen as an ‘abuse of soft law’ and to be annulled by the ECJ. In any case, the main issue
when dealing with post-legislative soft tools is the way they are administratively
hardened and, in this regard, relevant doubts on judicial review and guarantees might
arise. We also face soft obligations with soft enforcement (the paradigm of soft law):
these are more common in para-legislative situations (mainly for political objectives, as
the OMC). In other cases we find supposedly hard obligations with soft enforcement,
when a para-legislative function is again predominant to assure flexibility in
anticipation of politically or socially fluid circumstances. Finally, when a preparatory
character is at stake, the pre-law function is predominantly expressed through two
combinations: ‘soft obligation / soft enforcement’ and hard obligation/ soft
639 This classification and examples have been taken from F. TERPAN: “Soft Law in the European Union: The Changing Nature of EU Law”, in European Law Journal, Vol. 21 No. 1 (January 2015), pp. 68-96, at pp. 78-79. The open method of coordination would correspond to soft obligations (almost inexistent or merely declarative) but with soft enforcement through procedures and monitoring means.
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enforcement. The table below summarises the predominant functions that correspond to
the combination of both taxonomies related to soft law.
Table No. 3: Taxonomy of Soft Law and CSR in the EU
640 These examples are not exhaustive. All have been studied in detail in Chapter III, Section 2. 641 These examples are not exhaustive either. All have been mentioned in this section. 642 This is further explained at p. 260 (and footnotes therein).
Type of
Obligation
Type of
Enforcement
Predominant
Function
CSR Examples640 (and
type of instrument)
Other Examples641
(and type of instrument)
Soft
Soft
Para-law or
pre-law
Green Paper (2001) (soft instrument) Renewed EU Strategy for CSR 2011-2014 (soft instrument) Articles 1, 4 and 9 of the Cotonou Agreement 2010 (hard instrument). Brussels Declaration of the II EU-CELAC Summit June 2015 (soft instrument)
Open Method of Coordination (soft instrument of discussable effectiveness).
Soft
Hard
Post-law (or proper norms)
Regulation 1221/2009 on the voluntary participation in the EMAS (hard instrument). Article 41-46 of Directive 2013/34/EU (reports on payments to governments by the extractive industries) –hard instrument.
In the infringement procedure642: the Com. “may bring” the case (art. 258 TFEU, soft obligation). But the Com. has “hard enforcement” mechanisms (preventive measures in the agricultural and fisheries policies) to make States comply with soft instruments (letters of notice).
Hard
Hard
Post-law or proper norms (higher risk of ‘abuse of soft
Regulation 1286/2014 on Key information documents for small and retail investors. Civil liability if the KID is “clearly misleading or inaccurate” (hard instrument).
Location policy on CCPs included in the Eurosystem Oversight Policy Framework of the ECB. ‘Soft instrument’ annulled
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In light of these characteristics we understand the success of the so-called theory of
hybridity in EU Law, by virtue of which we cope with “hybrid constellations in which
both hard and soft processes operate in the same domain and affect the same actors”643,
which is an increasing reality. The presence of hard and soft norms governing the same
policies makes us think of two convergent “routes” towards the same objective. This
view synthesises rationalism and constructivism: the first because it still gives
importance to formal nomen iuris distinctions, and the second because it sensibly
accepts that both hard and soft instruments can complement each other and diversely
contribute to improve compliance with socially responsible standards and, in general
terms, with human rights (or with employment objectives or any other EU policy). Soft
law, born of new governance modes boosted after the 2000’s, has a growing influence
on law-making processes and taking into account their legal effects, it does not seem a
reversible phenomenon in the EU.
4.1.3. Assessment
Despite these classifications, we walk on an unstable ground difficult to systematise,
where generalisations are strongly inadvisable and where experimentation is
commonplace. It is delicate to look for “spill-over effects” between sub-categories of
soft-law or between sectors in which soft law plays any role. The opportunities are as
big as the perils in terms of democracy and legitimacy: soft law can perfectly be used to 643 D. M. TRUBEK, P. COTTRELL and M. NANCE: “‘Soft Law’, ‘Hard Law’ and European Integration”, in G. De BURCA and J. SCOTT (Eds.): Law and New Governance in the EU and the US, Oxford 2006, Hart Publishing, pp. 65-94, at p. 67.
law’ if the type of instrument is soft)
Directives 2014/24/EU and 204/25/EU on public procurement: possible exclusion from public contracts (hard instrument).
by the ECJ in case T-496/11 (‘abuse of soft law’)
Hard
Soft
Para-law or Pre-law
European Investment Bank Environmental and Social Handbook (para-law –‘internal code of conduct’, soft instrument).
Articles 28-29 TEU compliance of Member States with the CFSP but excluded from the ECJ’s jurisdiction: hard instrument, hard obligation, but no enforcement.
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circumvent the appropriate legislative procedures644. As any tool, the problem at the end
is the user.
We firstly would like to suggest that the Commission might be tempted to use soft law
as a new arm to increase its own influence in the inter-institutional balance of power.
Let’s anyway recall that the ECJ is prompt (and keen) to annul any eventual abuse of
soft law, as already noted. Extensive debate is written on the inter-institutional battles,
in which we do not enter, if not to suggest that the role of soft law has been forgotten. It
is generally accepted that the change from co-operation to co-decision procedures
increased the power of the EP ever since. The Parliament wanted to go further its
agenda-setting power and it focused on the obtention of a full veto prerogative (after
Maastricht). This traditional strategy of the Parliament to obtain a veto power, somehow
underestimated the fact that the capacity of determining or influencing the agenda leads
to a far from negligible political power, compared to the institution whose task is facing
the proposals (despite its eventual veto); nothing new under the sun, it is the classical
debate between presidential and parliamentary systems with respect to the legislative
agenda. Quantitative studies demonstrate in the overall the greater acceptance of EP’s
amendments with the co-decision system, in other words, an apparently increasing
power of the Parliament. Without denying this fact, we must nevertheless draw attention
to critics645 who have revised the available studies in this regard and, following similar
quantitative and qualitative surveys, have also concluded that, at the same time the
Commission seems to lose the battle, the EP is also loosing part of its influence on the
agenda-setting despite its new ‘veto toy’646.
This is fully consistent with our work on CSR in the EU, as most of the initiatives come
from the Commission. A relative loss of influence in the agenda-setting might have
been the price paid by the EP to get an unconditional veto power. And to some extent,
apart from specific CSR issues, this dynamic could also explain the boost of soft law
instruments since the 2000’s, as the new strategy of the Commission to exercise its
644 L. SENDEN: op. cit., pp. 30, 447 and 475 (for the incipient but unclear spill-over effects) and p. 334 (for the Commission escaping legislative procedures and using soft law “as a tool in the institutional balance”). 645 G. TSEBELIS, C.B. JENSEN, A. KALANDRAKIS and A. KREPPEL: “Legislative Procedures in the European Union: An Empirical Analysis”, in British Journal of Political Science, Vol. 31 No. 4 (Oct. 2001), pp. 573-599, at pp. 576-579 and 596-597. 646 There are many different positions on the relative “empowerment of the EP” and to what policies may apply that veto: S. HIX and B. HOYLAND: “Empowerment of the European Parliament”, in Annual Review of Political Sciences (London School of Economics), No. 16 (2013), pp. 171-189.
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power and maintain a high level of influence over the two other institutions. The EP
logically complained of being left aside in such initiatives, what bitterly shows this loss
of influence and the importance it gives to them: the EP “considers the open method of
coordination to be legally dubious” and “deplores the use of soft law by the
Commission where it is a surrogate for EU legislation that is still necessary per se,
having due regard to the principles of subsidiarity and proportionality, or were it
extrapolates the case-law of the Court of Justice into unchartered territory”647. However,
the Parliament does not defend an absolute ban of soft law instruments, but asks to be
consulted and to establish a proper mechanism of inter-institutional dialogue leading to
the adoption of soft law instruments648, a clear recognition of their potential importance.
Is it a pure advocacy of democratic values or a new episode of inter-institutional battles?
This is commonplace in European integration and, extrapolating the debate, we could
also wonder if the law-making capacity of the ECJ isn’t in fact –to some extent– also a
backdoor judicial constitutionalisation of the EU.
A nuanced discussion would conclude that, behind the Parliaments’ and the
Commission’s positions we find both sincere concerns in terms of legitimacy and
democracy and, also, a part of institutional battles. At the same time, desirable or not,
soft law continues to expand and some consider it a form of “delegalisation” of the EU:
“t]he use of soft law, together with the application of new forms of governance and the
relative decline of the Community method, would bring the EU closer to classical
international organisations”, a sort of “normalisation” which could be both positive and
negative for the future of the EU integration649.
More broadly, depending on the purpose of soft instruments, they might present
different advantages and disadvantages650. The reconciliation of a globalised economy
and international human rights law needs to go through different paths at the same time
and cannot rely anymore exclusively on vertical obligations and States’ responsibilities.
Not always hard law is the paradigm of neither precision nor the panacea to human
rights issues. Hard law’s tendency towards the fossilization of legal solutions is far from
647 EUROPEAN PARLIAMENT: “Resolution on institutional and legal implications of the use of ‘soft law’ instruments”, 2007/2028(INI) P6_TA (2007) 0366, OJEU C 187 E/, 24 July 2008, pp. 75-79, para. 4-5. 648 Ibíd., para. 17. 649 F. TERPAN: “Soft Law in the European Union: The Changing Nature of EU Law”, in op. cit., at p. 95. 650 A good summary of the pros and cons at: D. CHALMERS, G. DAVIES and G. MONTI: European Union Law, Cambridge 2014, Cambridge Univ. Press, pp. 114-116.
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the current needs of flexible and practical mechanisms to foster human rights horizontal
effects, as we have already said, among legal and natural persons. Substantial changes
in circumstances are more and more common, making it necessary to have available –as
a complement– more flexible mechanisms of self and co-regulation, which are more
easily amendable. It seems important to leave room for experimentation when we are
still not sure on what is the best stance to be adopted and, therefore, it seems reasonable
to avoid the difficult and slow modification procedures of hard law. In case of error, soft
law instruments do not imply the major negative consequences that might derive from
classic legislative initiatives. Moreover, effectiveness and coercion are not necessarily
correlated; the participation of all relevant stakeholders may help them internalise
conducts and practices before these “eventually” become obligatory, apart from taking
conscience of their social responsibility. Stakeholders are both internal and external to
companies and new technologies and cheaper communication networks can help to
materialise more opened participation systems in the decision-making procedures,
including the poor and voiceless. Finally, soft law approaches can also be more
sensitive to diversity between Member States, especially as the lack of legal personality
of transnational companies persists hampering their liability even in cases of human
rights violations.
Having said that, we are under no illusions that many legal doubts remain concerning
these new governance modes and their impact or effects on EU Law. Most objections
point to the fact that soft law can aggravate the EU’s democratic deficit because it
doesn’t follow the normal legislative procedures and, accordingly, lacks of legitimacy to
generate any legal effect, even indirectly. Sceptics blame it to be the new strategy of EU
institutions to circumvent democratic legislative procedures. The proceduralization and
administratization of European governance tends to forget that the decision-making
process is not an end in itself, but a mean to achieve a goal. It is essential to continue to
be vigilant in the final output and whether we are contributing to a sort of neo-feudal
privatisation of law-making. The notions of ‘stakeholders’ and ‘public participation’ is
perfumed with inclusiveness and transparency, but it can become a trap behind which
European corporatisation hides the project of revitalising a lobbyist market-based
European project rather than a rights-based Europe651. A calm and reasoned assessment
651 A. SOMMA: “Some like it soft. Soft Law e Hard Law nella costruzione del diritto private europeo”, in A. SOMMA (a cura di): op. cit., pp. 153-171, at pp. 167-171.
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might recognise the risks but also acknowledge the opportunity to improve traditional
participative democracy, completing it with new tools from the so-called deliberative
democracy. However, according to detractors, in addition to these alleged formal
illegality and ideological inadequacy, moving to what happens in practice, its voluntary
nature and programmatic character are seen as insufficient to give rise to truly positive
changes.
Critics further claim that soft law undermines citizens’ legal certainty and causes
confusion as for their legitimate expectations. Under this point of view the Commission
exceeds its competences in a breach of the conferral of powers enshrined in art. 5 TEU.
As soft instruments are formally not considered ‘legislative acts’, the Commission
seems to be enabled to escape the provisions laid down in the Protocol No. 2 on the
application of the principles of subsidiarity and proportionality, such as the obligation
to widely consult (art. 2) and inform national Parliaments and the other EU institutions
(art. 4). We also noted earlier that soft law is usually not available in all EU languages
what may rise problems under article 4 TEU on “the equality of Member States and
their national identities’, besides the problem of publicising norms to contribute to legal
certainty if we accept that soft instruments can perfectly have legal effects –as stated by
the ECJ.
No need of ambiguous legal jugglery: it is our understanding that these imperfections
can be corrected, for example, amending Protocols No. 1 and 2 in order to include an
article referred to ‘other initiatives with legal effects’ and not only ‘legislative acts’,
what would be perfectly consistent with the initial ECJ case-law. The amendment of
Protocols does not seem realistic, but an easier option would be an inter-institutional
agreement to ensure information exchanges and consultation between EU institutions
and between them and Member States when dealing with soft law, in view of its
increasing importance and therefore preserving another core principle, that of sincere
cooperation (art. 12 TEU). In doing so, the unsuccessful Open Method of Coordination
would be relatively updated and adapted to the actual potential of soft law. In any case,
we consider not completely fair the criticism based on democratic values and, more
concretely, the supposed incompatibility between soft law and legal certainty or
legitimate expectations. Soft law has also proved to have some potential regarding the
limitation of the Commission’s margin of discretion in its work and, looked at from that
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angle, it can contribute to clarify expectations and increase certainty, provided the
correction of the above-mentioned imperfections.
CSR and soft law
In the case of CSR, we have noted from our previous research that most CSR soft
initiatives would have pre-legislative and para-legislative functions and, therefore, are
less problematic in view of this pros and cons discussion –as seen through the ECJ case
law, most of the problematics arise with its post-law manifestation. Most of the CSR
advancements so far could be classified within these pre- and para-legislative functions,
less problematic as they are intended to prepare the field and involve all actors, while
promoting concrete results and creating a favourable political and social environment
for its further development.
On another front, we understand that soft law has per se some potential, regardless of its
eventual hardening, even if this should not be discarded. In fact, we are witnessing the
gradual introduction and mainstreaming of CSR issues in post-legislative soft
instruments of a variety of policies, and even a progressive hardening of CSR, though
very incipient. ‘Hardening’ processes should not come as a surprise to anyone. Before
2009, the Nice Charter has a number of similarities with an inter-institutional
agreement652: the intervention of all institutions and Member States in the drafting, the
importance of the consensus between the Council, the Commission and the Parliament
and its final solemn proclamation, bringing it near to soft international declarations. Not
only that, the main obligations fell to EU institutions, who committed to respect the
Charter in their work. Despite these obvious limitations, most of the public opinion and
politicians were pleased to welcome the Nice Charter and its potential was clear. Of
course, as is well-known, its hardening came only after the entry into force of the
Lisbon Treaty in December 2009, when the Charter was upgraded to the same legal
value as the Treaties; but even before being granted this treaty-level, the ECJ has a
652 E. MOSTACCI: La Soft Law nel Sistema delle fonti: uno studio comparato, Padova 2008, CEDAM, pp. 78-85.
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number of references to its provisions “on a quite number of occasions”653, as we have
seen with many other soft instruments we cited.
In chapter III we have already referred to some significant examples that it is worth
recalling at this point to interpret them as a kind of CSR ‘legal spill-over’, the most
important of which are the following: 1) Directives 2013/34/EU and 2014/95/EU on
non-financial reporting requirements; 2) Directives 2014/24/EU and 2014/25/EU which
constituted a wide public procurement reform novelty including CSR conditions; and
the current proposal for a Directive –under discussion between EU institutions– on
responsible supply chains of minerals from high-risk and conflict-affected areas654. We
start to observe CSR transfers: to post-law soft instruments but also to hard norms that
start to include unprecedented provisions that invites us not to discard any potential
hardening, even though the main function of CSR up to now has been preparatory and
predominantly soft, what is absolutely not a demerit or a sign of uselessness.
On a general note, it is understood that CSR consists of going beyond the already settled
legal standards, but the possibility of adding new regulatory options enriches the
situation and is likely to facilitate the attainment of corporations’ responsibility,
involving them in the process, as important economic operators, together with civil
society, social partners, non-governmental organisations and associations. Obviously,
we do not discuss that without the sword of Damocles of hard law, soft law might lose
part of its usefulness. The interest of this process is precisely the mixture of instruments
and initiatives that well deserve the effort to put things in order so as to properly gauge
the value of the on-going work. In this sense, most of the times we face soft and hard
norms when dealing with almost any EU policy, so that their interaction marks the
practical outcome, influencing the legal effects (directly for classic legislative initiatives
or indirectly applied by Courts when dealing with soft norms). We even have cases,
such as nanotechnologies655, in which the majority of legal instruments available are
653 G. De BURCA : « After the EU Charter of Fundamental Rights : The Court of Justice as a Human Rights Adjudicator ? », in Maastricht Journal of European and Comparative Law, Vol. 20 No. 2, pp. 168-185, at p. 169. 654 See chapter III, Section 2.3. 655 E. PARIOTTI and D. RUGGIU: “Governing nanotechnologies in Europe: Human Rights, Soft Law and Corporate Social Responsibility”, in H. VAN LENTE, C. COENEN, K. KONRAD, L. KRABBENBORG, C. MILBURN, F. SEIFERT, F. THOREAU and B ZÜLSDORF (Eds.): Little by Little: Expansions of Nanoscience and Emerging Technologies, Heidelberg 2012, IOS Press/AKA-Verlag, pp. 157-168.
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soft, an emblematic field where the potential benefits of soft law are clear in terms of
flexibility and adaptability to further developments.
At the end of the day, even though the Rousseaunian myth of the noble savage is over, it
would be too pessimistic to say that State’s coercion –by itself and taken alone– is the
primary purpose or raison d’être of any legal system. We rather think that legal orders
look forward to reaching relatively just and peaceful solutions to social problems or the
achievement of certain public goods656. The need and usefulness of State’s
responsibilities in terms of human rights is not discussable at all, ensuring the vertical
effect of human rights. However, as explained in the general part of this work, at this
stage of globalisation it seems naïve to totally rely on these vertical effects, without
stimulating as well forms of human rights respect through their horizontal effects657, in
the relationships among individuals and between individuals and corporations. It is in
this field where soft law might make its main contribution, unlike those who say that
only hard law can contribute to the achievement of human rights goals. We have already
seen that international human rights treaties and other hard mechanisms are not the
panacea. The unfortunately marginal role of human rights in CSR issues is due to this
school of thought that only accepts the benefits of hard law and is not able to imagine
the potential of strongly mainstreaming human rights into soft law so as to foster their
horizontal effects. We tend to a teleological approach to the rule of law, why not
including soft law instruments if they contribute to get closer to solutions and a better
society, as a complement rather than a replacement of hard law. Finally, the interest of
soft law is not only due to its eventual hardening, it actually has a potential per se.
Obviously, to adequately use this tool, we should equally raise awareness on the traps
behind this process.
656 We do not share the divinisation of the monopoly of the violence and institutional coercion mechanisms as the most effective ways to achieve any goal, in contrast to classic literature: H. KELSEN: Pure Theory of Law, London 2009, The Lawbook Exchange Ltd., 399 pages, passim. 657 As commented in the first part of this work, the idea of horizontal human rights duties is highly controversial. It is also worth reading: E. PARIOTTI: “ ‘Effetto orizzontale’ dei diritti umani e impresse transnazionali nello spazio europeo”, in I. TRUJILLO and F. VIOLA (Eds.): Identità, diritti, raggione pubblica in Europa, Bologna 2007, Il Mulino, pp. 171-201.
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4.2. Access to justice: an open question
4.2.1. Premises on corporate extraterritorial responsibilities
Many of the official documents studied indicate that CSR policies and the incipient sets
of rules are still under development and could have a stronger impact, especially if they
were accompanied with effective mechanisms to investigate, punish and compensate
eventual breaches, as recurrently noted by the EU institutions (in particular, by the
Parliament). John Ruggie’s UNGPs attach great importance to access to justice in their
third level, the remediation, in which it is said that effective judicial mechanisms are at
the core of ensuring access to remedy as stated in Principle 25. Principle 26 further
provides that “States should take appropriate steps to ensure the effectiveness of
domestic judicial mechanisms when addressing business-related human rights abuses,
including considering ways to reduce legal, practical and other relevant barriers that
could lead to a denial of access to remedy”, respecting the characteristics of due process
in such a way that “States should ensure that they do not erect barriers to prevent
legitimate cases from being brought before the courts […]”658. In the dialectic between
hard and soft law, the second cannot exist without the first one and access to justice
looks simply unavoidable, but the definition on ‘legitimate cases’ remains unclear.
To ensure a useful and positive implementation of CSR initiatives, access to justice is
the necessary threat of hard law, as recognised by the UN, in this mixed CSR scheme.
Alleged victims of transnational companies face multiple obstacles among which we
highlight the lack of guarantees of many domestic judicial systems (in developing States
or in fragile and failed States), general misinformation on access to remedies,
difficulties in acceding to legal aid and unknown procedural barriers –mainly ratione
personae and ratione loci. In general terms, we could summarise there is an inequality
of arms between alleged victims and authors, in the absence of institutional support for
legal disputes that, in fact, should be matters of general interest.
It is utterly important to make some terminological distinctions to properly introduce
this debate, starting with the essential difference between the private interest of the
litigants and the public interests of the forum: there are many factors that need to be
658 UN Doc. A/HRC/17/31, 21 March 2011, op. cit., Principle 26.
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balanced. In talking about remedies, most people immediately think of judicial levers.
The UN International Law Commission distinguishes three types of jurisdiction:
prescriptive (norms or legislative acts), adjudicative (judicial review) and enforcement
(executive)659. All three might have extraterritorial expressions, but in CSR the debate is
centred on ‘extraterritorial adjudicative jurisdiction’, as far as the other two possibilities
(extraterritorial legislation and enforcement) are –prima facie– much more difficult to
reconcile with art. 2.7 of the UN Charter. States have the possibility to exert an
extraterritorial adjudicative jurisdiction; “[h] owever, a State exercises such jurisdiction
in the interest of the international community rather than exclusively in its own national
interest”660, indirectly recognising the existence of superior interests of the international
society.
Working on John Ruggie’s matrix on extraterritoriality, the initiatives to make
companies ‘accountable’ should not be limited to judicial liability: there is a myriad of
less problematic and not-less-important measures “with extraterritorial implications”661,
particularly in public procurement, export credit agencies and non-financial reporting
requirements: the EU has very opportunely understood this, as we have seen analysing
the level of implementation of CSR policies. It is less problematic in terms of
International Law because “the State is not exercising extraterritorial jurisdiction, but
simply its territorial jurisdiction with extraterritorial implications”. Indeed,
extraterritoriality is not the “magic potion” to definitively solve human rights abuses by
TNCs: corporate responsibilities are not limited to “liability”, which is only an aspect of
their “accountability” to be added to reputational risks, stock markets effects, public
contracts, etc.662
This is not to deny the usefulness and importance of effective judicial mechanisms; it is
only aimed at underlining that incident-based and judicially-limited strategies by home
States of TNCs may eventually lack of long-term effects on the problems at host States:
lack of governance, human rights structural weaknesses, and consolidated corruption.
659 UNITED NATIONS: Report of the International Law Commission, Fifty-eighth session, New York 2006, UN Doc. A/61/10, pp. 516-519 (Annex E on Extraterritorial Jurisdiction, see in particular para. 5). 660 Ibíd., para 16. 661 Less problematic because the “State is not exercising extraterritorial jurisdiction, but simply its territorial jurisdiction with extraterritorial implications”. N. BERNAZ: “Enhancing Corporate Accountability for Human Rights Violations: Is Extraterritoriality the Magic Potion?”, in Journal of Business Ethics, Vol. 117 No. 3, pp. 493-511, at p. 496. 662 Ibíd., on the “wider notion of accountability”.
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There is a need for a pragmatic and holistic approach to extraterritoriality in order to
abandon the idea it constitutes the final panacea.
States have for the moment no obligation to adopt exterritorial human rights measures
as far as, strictly speaking, each State is the sole responsible for the respect of human
rights within its own jurisdiction. Obviously, the “business and human rights” studies
have shown that the overreliance on vertical effects and State responsibilities fail to
effectively address many human rights’ abuses by TNCs, since globalisation has created
a governance gap. Under International Law, it early arose that what is not prohibited
might be permitted663: the lack of an obligation does not necessarily mean it is unlawful
to act, and has not impeded an increasing international opinio iuris and practice in this
direction, starting with many General Comments and Concluding Observations of UN
bodies664, though insufficient to speak of any customary obligation yet.
Given that this consensus is under construction, it is again advisable to remain realistic
and pragmatic. A further distinction has to be made between criminal and civil
responsibilities, bearing in mind that many legal orders do not contemplate criminal
offences for legal persons (companies). There are authoritative voices that advocate for
the criminalisation of human rights violations, “including those that take place outside
the EU”665, and there is no doubt that many international instruments in humanitarian
law and international criminal law already include partial obligations for non-State
actors666. Its origin is the Nuremberg trials under the US Military Tribunal and Control
663 “International law governs relations between independent States. The rules of law binding upon States therefore emanate from their own free will as expressed in conventions or by usages generally accepted as expressing principles of law and established in order to regulate the relations between these co-existing independent communities or with a view to the achievement of common aims. Restrictions upon the independence of States cannot therefore be presumed”. PERMANENT COURT OF INTERNATIONAL JUSTICE: Case of the S.S. “Lotus”, Judgment No. 9 of 7 September 1927, p. 18 (emphasis added). This was very controversially confirmed when the ICJ had to assess lawfulness of the secession of Kosovo in 2008: ICJ: Accordance with International Law of the Unilateral Declaration of Independence in Respect of Kosovo, Advisory Opinion, ICJ Reports 2010, 22 July 2010, p. 403. 664 It should be noted that the legal force of the practice of UN Bodies is relative, even though it has an indicative value of the current international tendencies as reflected by the CESCR and CERD: N. BERNAZ: op. cit., pp. 504-505. 665 O. De SCHUTTER, R. McCORQUODALE and G. SKINNER: The Third Pillar: Access to Judicial Remedies for Human Rights Violations by Transnational Businesses, December 2013 (online publication), ICAR-CORE-ECCJ, p. 88 (recommendation No. 29). 666 Under international humanitarian law, corporate liability can be argued in relation to article 75 of Rome Statue of the ICC, common art. 5 of the ICCPR and ICESCR, common article 3 of the four Geneva Conventions under certain conditions, art. 3 of the Hague Convention IV, art. 1.2 of the International Convention on the Suppression and Punishment of the Crime of Apartheid, art. 2 of the Basel Convention, and art. 10 of the UN Convention against Organised Transnational Crime. Víd.: E. MONGELARD: “Corporate civil liability for violations of international humanitarian law”, in
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Council Order 10, but “there is a risk of overemphasising the potential of international
criminal law to bring about human rights compliance among businesses and to serve as
an accountability mechanism for corporate human rights abuses”667. For instance, not all
human rights violations can be considered ‘international crimes’. Secondly, criminal
claims rely on the prosecutor’s role and, unfortunately, this is not always a good idea as
we have checked in two important French cases. In the first one, currently under
instruction, the French company then called Amesys was said to sell internet spying
software to the Libyan regime of Colonel Muammar Gaddafi. According to the
information of diverse NGOs and CSOs, this software was behind the arbitrary
detention and torture of five pro-democracy activists opposed to the regime. A claim
was brought in France but the Paris Prosecutor’s Office steadily opposed the claim and,
on several occasions, asked for its dismissal delaying the admissibility proceedings until
January 2013668. Also concerning France, a second case confirms the discussable role of
public prosecutors: one of the largest timber traders, the Danish company DLH, and
particularly its French branch, were said to import through the port of Nantes allegedly
illegal timber coming from Liberia and apparently behind the financing of Charles
Taylor’s faction in the civil war. The public prosecutor of Nantes transferred the case to
Montpellier and, after two years without any news, Montpellier’s public prosecutor
informed the plaintiffs that he would not open any preliminary inquiry669. In sum, public
prosecutors are generally unexperienced (if not unwilling) to deal with these cases
because of their complexity, sometimes their political sensitiveness, and the lack of
resources.
In view of the difficulties around criminal proceedings, civil liability should not be
neglected; in colloquial terms, there is a Spanish expression that goes “lo que les duele
International Review of the Red Cross, Vol. 88 No. 863, September 2006, pp. 665-691, at pp. 670-672 and 682. 667 J. KYRIAKAKIS: “Developments in international criminal law and the case of business involvement in international crimes”, in International Review of the Red Cross, Vol. 94 No. 887, Autumn 2012, pp. 981-1005, at pp. 988-989. 668 FÉDERATION INTERNATIONALE DES LIGUES DE DROITS DE L’HOMME: L’affaire Amesys, Paris 2014 (online publication ISSN 2225-1790), p. 7. 669 The plaintiffs were a group of NGOs and CSOs that, under French law, were recognised as entitled to make judicial claims. The French law establishes a crime of “recel”: the intermediate sell of a product which is known to be of illegal origin. Since there was no public inquiry, there are not official documents available. See the NGOs websites at: http://www.asso-sherpa.org/procedures-and-milestones-dlh-liberia#.Vf8O08sVgpY and https://www.globalwitness.org/archive/8572/.
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es el bolsillo”670. Many critics correctly claim that civil trials are not possible under
International Law. Indeed, pragmatically speaking there is no need to discuss the
criminal liability of TNCs: it is about the civil consequences of human rights breaches.
For example, most internal orders have some kind of secondary or subsidiary civil
liability when criminal offences run parallel to civil claims, in line with the Roman
adage that says “societas delinquere non potest”. Pragmatism leads us to believe that
civil claims are the most interesting option, in so far as it entails tangible remediation
measures, without rejecting eventual criminal responsibilities if individuals are
identified and the legal order at stake allows it.
In any case, civil actions are not without problems. Several polemic cases brought
before UK Courts, finally settled out of court, can give an idea on the cons of civil
claims. In two cases, South-African individuals claimed damages for mercury poisoning
when working at a factory of a wholly-owned subsidiary of an English company (Thor
Chemicals Holdings Ltd). Both cases of 1997 and 2000671 were quickly aborted with
multi-million dollar settlements and “no admission of liability” 672.
In 2009 nearly 30.000 claimants from Ivory Coast filed a suit against Trafigura Ltd. for
the alleged dumping of toxic waste, having caused related diseases among the
population living by the coast673. Once the case was declared admissible and having
started the probative phase before the English High Court674, Trafigura decided to pay
$1.500 to each alleged victim and no further inquiry was done, since civil proceedings
only function upon request by a party. The settlement, however, led to a second lawsuit
referred to the costs and delivered in 2011: according to the Judge, costs alleged by the
claimants seemed disproportionate even though an item by item assessment had to be
done, from witnesses, security, to experts, medical investigations, media and
670 An English translation would be “where it hurts, in their pockets”. I. VIVAS-TESÓN: “La implementación de los Principios Rectores ONU sobre empresas y derechos humanos en España”, in Anais dos III Congresso Iberoamericano de Direito Sanitário / II Congresso Brasileiro de Direitto Sanitário, Vol. 2 No. 2, July-December 2013, pp. 870-880, at p. 878. 671 Sithole v. Thor Chemicals Holding Ltd, [2000] A2/2000/2894 (AC), and the previous settlement, also for mercury poisoning, in Ngcobo v Thor Chemicals Holdings Ltd & Desmond Cowley of 1997. 672 C. BUGGENHOUDT and S. COLMANT: Report ASF. Justice in a Globalised Economy: A Challenge for Lawyers. Corporate Responsibility and Accountability in European Courts, Brussels 2011, Avocats Sans Frontières, pp. 10-12. 673 For a summary and comment of this case, also see: Y. FARAH: “Toward a Multi-Directional Approach to Corporate Accountability”, in S. MICHALOWSKI (Ed.): Corporate Accountability in the Context of Transitional Justice, New York 2013, Routledge Ed., pp. 27-51, at pp. 41-42. 674 The Judge was already delivering opinions on witnesses and experts: ENGLISH HIGH COURT: Yao Essaie Motto and Ors v Trafigura Ltd., [2009] EWHC 1246 (QB).
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information, lawyers retribution or even extra-territorial costs (for research in other
locations like Malta, Amsterdam, Lagos or Norway). The Judge partially recognised the
claimant’s bill, while he clarified that “it is not open to me to decide whether those
witness statements were i) admissible; and or ii) of any probative value in relation to
any of the issues in the case, since there has never been a trial”675. Again, “the
defendants settled with a denial of liability”676, but for the judge the settlement itself
“effectively prevents any argument that the proceedings should never have been brought
because they would be bound to fail”677, as the defendants argued to disallow the costs
of the alleged victims. Trafigura almost became a judicial saga because it operated from
the port of Amsterdam: a € 1 million fine was imposed to the company in the
Netherlands, considering it a “co-perpetrator” indirectly responsible and “knowing that
they [the toxic substances] are harmful to life or health”678. One year later, the Court of
Appeal confirmed the fine under the same Dutch Environmental Acts679.
The third example of settlement involves Shell activities in the Niger Delta, a very
problematic oil-producing site that has led to numerous lawsuits in different courts of
the EU and the US. In this particular case, Shell decided to compensate the alleged
victims via an extrajudicial agreement only after the Judge had delivered a preliminary
ruling on eight issues, answering that claimants were entitled to compensation in respect
of 2008 oil spills, even though spills caused by sabotage and illegal activities were not
imputable to the company680. The full trial was planned for 2015 and Shell paid £ 55
million divided as follows: £ 35 million for the individuals (aprox. £ 2,200 each, circa.
675 HIGH COURT OF JUSTICE (Queen’s Bench Division, Senior Courts Costs Office): Yao Essaie MOTTO & ORS v. Trafigura Ltd and Trafigura Beheer BV, Judgment of 15 February 2011, EWHC 90201, para. 214 ii), 4.2. 676 Ibíd., para 67. 677 Ibíd., para. 206 ii). 678 RECHTBANK AMSTERDAM (Amsterdam Court): Trafigura Beheer B.V., Case No. 13/846003-06, Judgment of 23/07/2010, para 15. Unofficial translation made with “Google Translator” tool. The judgment is only available in Dutch at: http://uitspraken.rechtspraak.nl/inziendocument?id=ECLI:NL:RBAMS:2010:BN2149. 679 GERECHTSHOF AMSTERDAM (Amsterdam Court of Appeal): Trafigura Beheer B.V –Appeal, Case No. 23/003334-10, Judgment of 23 December 2011. Available (in Dutch) at: http://uitspraken.rechtspraak.nl/inziendocument?id=ECLI:NL:GHAMS:2011:BU9237. 680 High Court of Justice (Queen’s Bench Division): The Bodo Community and Others v. The Shell Petroleum Development Company of Nigeria Limited, Judgment of 20 June 2014, EWHC 1973 (TCC), para 93 (on oil spills due to sabotage and criminal activities) and para. 151-152 and 160 (on the calculation of damages according to Nigeria’s standard of living and price of the land).
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33 times the monthly minimum wage in Nigeria), and £ 20 million for the Bodo
Community681.
Therefore, the other side of the coin of civil claims is the eventual risk of ending up in
out of court settlements that, ultimately, might shed little light on human rights
concerns, even including anti-suit clauses and non-liability declarations that the victims
have to sign to reach the agreements. At least in the EU, an arbitration agreement is not
sufficient to prevent an EU Court from hearing a case, even if the agreement includes an
anti-suit clause682, because one of the parties would be deprived of judicial protection683.
With its pros and cons, we still consider that the civil litigation looks more attractive
and practical than criminal proceedings, also following to the foregoing general
considerations on extraterritoriality and liability.
Having said this, the debate on corporate extraterritorial responsibilities can therefore be
reduced to the following question: to what extent an extraterritorial adjudicative
jurisdiction can be exercised to judge extra-contractual civil responsibilities in cases of
human rights violations by TNCs.
By way of premise, most of the problematic aspects will turn around the admissibility
criteria to exert such extraterritorial adjudicative jurisdiction and obstacles ratione
temporis can also arise because of victims’ misinformation on procedural requirements
and, even ratione materiae, to duly translate human rights issues into internal civil
681 Also see: http://www.leighday.co.uk/News/2015/January-2015/Shell-agrees-55m-compensation-deal-for-Nigeria-Del 682 “Accordingly, the use of an anti-suit injunction to prevent a court of a Member State, which normally has jurisdiction to resolve a dispute under Article 5(3) of Regulation No 44/2001, from ruling, in accordance with Article 1(2)(d) of that regulation, on the very applicability of the regulation to the dispute brought before it necessarily amounts to stripping that court of the power to rule on its own jurisdiction under Regulation No 44/2001. […] a party could avoid the proceedings merely by relying on that agreement and the applicant, which considers that the agreement is void, inoperative or incapable of being performed, would thus be barred from access to the court before which it brought proceedings under Article 5(3) of Regulation No 44/2001 and would therefore be deprived of a form of judicial protection to which it is entitled. […] [I]t is incompatible with Regulation No 44/2001 for a court of a Member State to make an order to restrain a person from commencing or continuing proceedings before the courts of another Member State on the ground that such proceedings would be contrary to an arbitration agreement.” Case C-185/07, Allianz SpA and GeneraliAssicurazioni Generali SpA v. West Tankers Inc., Judgment of 10 February 2009 (Grand Chamber), para. 28, 31 and 34 (extracted citations). 683 However, EU Courts have both possibilities: to recognise or not the validity of such anti-suit clauses. “Regulation No 44/2001 must be interpreted as not precluding a court of a Member State from recognising and enforcing, or from refusing to recognise and enforce, an arbitral award prohibiting a party from bringing certain claims before a court of that Member State, since that regulation does not govern the recognition and enforcement, in a Member State, of an arbitral award issued by an arbitral tribunal in another Member State.” Case C-536/13, Gazprom OAO v. Lietuvos Respublika, Judgment of 13 May 2015 (Grand Chamber), para. 44.
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responsibility claims. However, as said before, the hardest nuts to crack will be ratione
loci and ratione personae.
Ratione loci
Apart from the debate on extraterritoriality itself, it is not evident to reverse the general
rule that offences have to be judged in the place where they occur (lex loci delicti). The
forum non conveniens doctrine insists on the importance of the ‘natural forum’ because
access to evidence and witnesses will be easier, and it will always be difficult for a
Court to apply an alien legal order (that of the place where the violation took place),
including probably different standards for reparation if the violation is finally proved.
This doctrine generally corresponds to common law systems. Many authors defend its
usefulness to “level the playing field” and prevent “a plaintiff from compelling
litigation in a forum where the defendant will have great difficulty in obtaining evidence
vital to the defense”684. Moreover, tax payers might be reluctant to welcome the “glut of
foreign plaintiffs suing for injuries inflicted abroad”685. In our view, this reflects a rather
disproportionate concern and care of TNCs’ defence: the problems for litigation in
terms of access to evidence will be the same for alleged victims and authors if an
external forum accepts jurisdiction and, if there is any significant and usual inequality
of arms, it will rather undermine the victims. According to the famous and amusing
concurring opinion of Judge Jackson in a US case, back in 1942, he put forward the
exaggerated “protective doctrines in terms of sheltering defendants against vexatious
and harassing suits […] behind a rather fantastic fiction that a widow is harassing the
Illinois Central Railroad”686. This is the equivalent to say that, in some cases, the public
interest would prevail, which is not an uncontroversial conclusion.
A milestone to clarify this doctrine on jurisdiction ratione loci is the so-called ‘Spiliada
test’, a twofold scheme foreseen by the House of Lords (UK): firstly, the defendant has
to demonstrate that not only the UK is not a suitable forum but that there is another
684 R. J. WEINTRAUB: “Judicial Guidance of Litigation to an Appropriate Forum”, in L. PEREZNIETO CASTRO, T. TREVES and F. SEATZU (Eds.): Tradition and Innovation of Private International Law at the Beginning of the Third Millenium, New York 2006, Juris Publishing Inc., pp. 251-260, at p. 260. 685 Ibíd., p. 258. 686 US SUPREME COURT: Miles v. Illinois Central R. Co., 315 US 698 (1942), Judgment of 30 March 1942, p. 706. Available at: https://supreme.justia.com/cases/federal/us/315/698/case.html (also cited by WEINTRAUB, supra, footnote 684).
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natural and clearly more appropriate Court, notwithstanding the fact that, in the second
phase of the reasoning, the Court may declare itself competent if, “established
objectively by cogent evidence, […] the plaintiff will not obtain justice in the foreign
jurisdiction”687. This helps to handle the forum non conveniens doctrine in favour of
human rights litigations if the alleged victims succeed to show that the difficulties in the
natural forum “would amount to a denial of justice”, as in the off-cited case Lubbe v.
Cape688. This is even compatible with the sceptics view against any ‘public interest’ of
courts: it can be seen as a way to balance the private interests of the litigants so that, in
applying the ‘Spiliada test’, “questions of judicial amour propre and political interest or
responsibility have no part to play”689. The burden of proof is shared: the defendant has
to argue the suitability of another forum, but the plaintiff has the obligation to clearly
show that “substantial justice cannot be done in the appropriate forum”, to convince a
UK Court to take over –‘substantial justice’ meaning that claimants will have to accept
normal differences between legal systems, perhaps less “generous” than the British690.
As we will argue in the following section, the EU has tackled the problem ratione loci
differently; let’s note for instance that exceptions to ‘local remedies’ are not new in
687 “ […] the burden resting on the defendant is not just to show that England is not the natural or appropriate forum for the trial, but to establish that there is another available forum which is clearly or distinctly more appropriate than the English forum. […] If however the court concludes at that stage that there is some other available forum which prima facie is clearly more appropriate for the trial of the action, it will ordinarily grant a stay unless there are circumstances by reason of which justice requires that a stay should nevertheless not be granted. In this enquiry, the court will consider all the circumstances of the case, including circumstances which go beyond those taken into account when considering connecting factors with other jurisdictions. One such factor can be the fact, if established objectively by cogent evidence, that the plaintiff will not obtain justice in the foreign jurisdiction”, HOUSE OF LORDS (UK): Spiliada Maritime Corporation v. Cansulex Ltd., Judgment of 19 November 1986, Paragraphs 6.3 and 6.6. 688 “If these proceedings were stayed in favour of the more appropriate forum in South Africa the probability is that the plaintiffs would have no means of obtaining the professional representation and the expert evidence which would be essential if these claims were to be justly decided. This would amount to a denial of justice […] at the second stage of the Spiliada test” HOUSE OF LORDS: Lubbe and Others and Cape Plc. And Related Appeals [2000] UKHL 41, Judgment of 20 July 2000 (opinions of the Lords of Appeal for Judgment), para. 28. 689 Ibíd., para. 33. 690 “he [the defendant] has to establish that there is another available forum which is clearly or distinctly more appropriate than the English forum in which jurisdiction has been founded by the plaintiff as of right. […]This is the first stage. However, even if the court concludes at that stage that the other forum is clearly more appropriate for the trial of the action, the court may nevertheless decline to grant a stay if persuaded by the plaintiff, on whom the burden of proof then lies, that justice requires that a stay should not be granted. This is the second stage.” HOUSE OF LORDS: Connelly (A.P.) v. RTZ Corporation Plc and Others, Judgment of 24 July 1997, available at: http://www.publications.parliament.uk/pa/ld199798/ldjudgmt/jd970724/con01.htm.
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international human rights law: the non-exhaustion of domestic remedies are generally
justified if there are unreasonable delays or lack of judicial guarantees691.
While this may sound strange, forum shopping is also possible in human rights cases,
and sometimes perfectly legal and legitimate. The forum non conveniens doctrine has
been refined through the jurisprudence to evaluate and limit the best fora, especially in
common law systems, but still leaves room for human rights litigation under the
conditions explained above. To some extent, forum shopping is also a legitimate
practice for human rights litigators when, in representation of alleged victims, they have
to choose the most advantageous court, provided a choice is possible and under concrete
conditions (lis pendens, ne bis in idem, and other procedural aspects that each tribunal
lays down). Generally speaking, human rights lawyers pay little attention to the election
of the correct forum, compared to other fields of law. In the EU, there are two available
options: the European Court of Human Rights in Strasbourg (Council of Europe) or the
European Court of Justice in Luxembourg (EU), so that human rights lawyers will have
a delicate work -and many times neglected- even before starting the proceedings. In
Latin America, a case might be more suitable for the UN Committee on Human Rights
rather than the Inter-American Court of Human Rights, or even in some cases the
Special Procedures branch of the UN Human Rights Council deems to be a more
effective and practical shortcut (tough less juridical).
Ratione personae
The first problem is that of the legal personality of TNCs and the difficulty to trace a
direct or indirect causal link with alleged human rights abuses in third countries, taking
into account the complexity of business structures. In Private International Law,
“connecting factors that go beyond old-fashioned territorial limits”692 are more and
more usual, at the same time that companies are considered, to some degree, right-
holders, for example in the protection of international investments. According to the 691 To mention just a few examples, see: art. 5.2 b) of the Optional Protocol to the International Covenant on Civil and Political Rights; exceptions to art. 35 of the European Convention on Human Rights through the Strasbourg’s case law in terms of availability and effectiveness (see EUROPEAN COURT OF HUMAN RIGHTS: Practical Guide on Admissibility Criteria, Strasbourg 2011, p. 18, available at www.echr.coe.int), or art. 46.2 a), b) and c) on unreasonable delays and due process of the Inter-American Convention on Human Rights. 692 A. SANGER: “Transnational Human Rights Cases? Not in our Backyard!” in The Cambridge Law Journal, Vol. 72 No. 3, November 2013, pp. 487-490, at p. 489.
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International Court of Justice, it deems to be sometimes necessary to “prevent the
misuse of the privileges of legal personality, as in certain cases of fraud or malfeasance,
to protect third persons […] or to prevent the evasion of legal requirements or of
obligations”693. The lifting of the corporate veil might be justified in certain “special
circumstances”694, why not in the interest of internationally recognised human rights
obligations. Despite the fact that only States and International Organisations are the
primary subjects of international law, the recognition of TNCs does not mean that they
might start appointing ambassadors, but to recognise that, in fact, they should have a
“limited personality”695 within the framework of their rights in order to allow parallel
responsibilities.
Perhaps the expression ‘lifting the corporate veil’ only represents a particular facet of a
broader phenomenon in International Law: the gradual piercing of legal personality, to
which human rights have greatly contributed while gradually recognising a limited
locus standi of individuals. We have therefore to “rethink jurisdiction” in the light of
recent developments after which the “idea of jurisdiction as purely an expression of the
rights and powers of sovereign states requires reconceptualization”696. The challenges
derived from piracy, terrorism and transnational crime have International Law reeling
against the ropes. Globalisation has also led to the multiplication of asymmetric
transnational (but non-international) conflicts697, not to mention the complex human
rights issues raised by the activities of TNCs. The concept of sovereignty has always
693 INTERNATIONAL COURT OF JUSTICE: Barcelona Traction, Light and Power Company, Limited, Judgement, I.C.J. Reports 1970, p. 3, para. 56. 694 In that case, to protect shareholders: “the process of lifting the veil, being an exceptional one admitted by municipal law in respect of an institution of its own making, is equally admissible to play a similar role in international law. It follows that on the international plane also there may in principle be special circumstances which justify the lifting of the veil in the interest of shareholders”. Ibíd., para. 58. 695 F.J. ZAMORA CABOT: “Kiobel v. Royal Dutch Corp y los litigios transnacionales sobre derechos humanos”, in Working Papers ‘El tiempo de los Derechos’, No. 4 (2011), ISSN 1989-8797, pp.1-13, p. 7. 696 “This development suggests the need to rethink the idea of jurisdiction in international law. To the extent that States have agreed to individually enforceable rights for foreign investors which extend to a right of access to civil or administrative remedies […] they have apparently agreed that they owe jurisdictional obligations not only to foreign States but also to individuals. It is true that these rights may be considered as products of State consent through treaties or even (more controversially) customary international law, suggesting that the individual rights thus created can be accommodates within the existing framework of jurisdictional rules. It can nevertheless also be argued that through the recognition of individuals as positive actors and jurisdictional rights-bearers, the idea of jurisdiction as purely an expression of the rights and powers of sovereign States requires reconceptualization”. A. MILLS: “Rethinking Jurisdiction in International Law”, in The British Yearbook of International Law, Vol. 84 No. 1, 2014, pp. 187-239, at pp. 218-219. 697 See R. CALDUCH CERVERA: “Procesos de cooperación y conflicto en el sistema internacional del siglo XXI”, in J.C. PEREIRA (Coord.): Historia de las Relaciones Internacionales Contemporáneas, Madrid 2009, Ariel Ed., pp. 701-721, at pp. 709-713.
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moved between “autonomy and responsibility”698, but these developments tend to
increase the relative weight of the latter. This has to come with the understanding that
there are no self-contained regimes in International Law, as argued in the first part of
this work.
Notwithstanding the fact that it is not a consolidated doctrine yet, we rather support a
functional definition of companies –consistently with other issues in this research.
Otherwise, actions taken by apparently separate entities, distributed across associates,
subsidiaries, branches and suppliers, can be legal individually taken, but the sum of
them can amount to illegalities. In general terms, the complexity of corporate structures
are probably not deliberately designed to violate human rights699, but they reveal to be
very useful to avoid responsibilities once problems arise. In this sense, it is vital to keep
close to what happens in the field in order to test merely formal separations based on
legal personality.
We can build on the experience in the area of international taxation law and money
laundering, where there are instruments to pierce the corporate veil. There are sound
reasons to do so in a variety of international and European standards. There is a solid
ECJ’s case law that has empowered the Commission, in the area of competition law, to
extraterritorially prosecute foreign parent companies, based on “the economic unit
doctrine” and the “economic continuity test” (in cases of “succession of enterprises”) if
there are enough elements “to shift the liability to the controlling entity”700. Therefore,
in the area of competition law, the EU did not want to be the victim of merely formal
separations based on legal personality, when subsidiaries in Europe were carrying out
anti-trust activities under the orders of parent companies based outside the EU. In
human rights cases the situation is exactly the opposite as the parent company is usually
698 T. GAMMELTOFT-HANSEN and T. E. AALBERTS: “Sovereignty at Sea: The Law and Politics of saving lives in the Mare Liberum”, in Working Papers of the Danish Institute for International Studies, No. 18, Copenhagen 2010, 31 pp., at pp. 8-13. 699 For example, the figure of ‘limited liability’ was intended to promote private investors’ confidence, but not intended to make companies unaccountable, for example, after an environmental disaster, so that… “When called upon by the government to clean up the mess, the MNC announces that it is bankrupt: all of the revenues have already been paid out to shareholders. In these circumstances, MNCs are taking advantage of limited liability”, as noted by the Nobel in Economy J. STIGLITZ: “Regulating Multinational Corporations: Towards Principles of Cross-Border Legal Frameworks in a Globalised World Balancing Rights with Responsibilities”, in American University International Law Review, Vol. 23 No. 3 (2007-2008), pp. 451-558, at p. 474. 700 A comprehensive study on this case law at: B. CORTESE: “Piercing the Corporate Veil in EU Competition Law: the Parent Subsidiary Relationship and Antitrust Liability”, in B. CORTESE (Ed.): EU Competition Law. Between Public and Private Enforcement, The Netherlands 2014, Kluwer Law International, pp. 73-93, at p. 83.
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registered in the EU, but we do not see why the same reasoning would not be
applicable.
The OECD Guidelines on Multinational Enterprises acknowledge that different
enterprises operating abroad might be subject to different legislations, but “compliance
and control systems should extend where possible to these subsidiaries” and “the
board’s monitoring of governance includes continuous review of internal structures to
ensure clear lines of management accountability throughout the group”701. Formally
speaking, a subsidiary is controlled by the parent company when the latter owns more
than 50% of shares or when it has the right to appoint or remove a majority of directors
and managers, in terms of control and not only simple ownership. Control is presumed
to be extended to the subsidiaries of subsidiaries: if subsidiary B controls C, but B is
controlled by A, then the logical conclusion is that A controls C, and so on, as it
happens in complex conglomerates that characterize multinational corporations in a
generational structure702. EUROSTAT and the Seventh Directive went a step further
stating that “if nobody holds the legal power to control B, but A has effective control
over B, i.e., there is a presumption of a participating interest of A in B through the
ownership by A of 20% or more of the capital of B, and A actually exercises a dominant
influence over B, or B is managed on a unified basis by A”703, which is a functional and
more realistic approach to determine the level of power over subsidiaries and,
consequently, potential responsibilities. In fact, the main function of ‘Holding’
corporations is to control and direct groups of subsidiaries or associates (in the latter,
the parent company is supposed to have between 10% and 50% of shares), in a building
where branches are also a different form704. Besides, article 5 of the OECD Model Tax
Convention provides with a very useful definition of ‘permanent establishment’: “a
fixed place of business through which the business of an enterprise is wholly or partly
701 OECD: Guidelines of Multinational Enterprises, Text and commentary, Paris 2011, p. 22. 702 To find the internationally recognised definitions, please check the OECD Glossary (at https://stats.oecd.org/glossary/) and EUROSTAT’s concepts and definitions database: (http://ec.europa.eu/eurostat/ramon/nomenclatures/) 703 EUROSTAT (supra) and Seventh Council Directive 83/349/EEC of 13 June 1983. 704 “A branch is a wholly or jointly owned unincorporated enterprise in the host country which is one of the following: (i) a permanent establishment or office of the foreign investor; (ii) an unincorporated partnership or joint venture between the foreign direct investor and one or more third parties; (iii) land, structures (except structures owned by government entities), and /or immovable equipment and objects directly owned by a foreign resident; or (iv) mobile equipment (such as ships, aircraft, gas- or oil‑drilling rights) operating within a country, other than that of the foreign investor, for at least one year.” UNCTAD: World Investment Report. Transnational Corporations, Extractive Industries and Development, (2007), p. 245
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carried on”, including “a place of management, a branch, an office, a factory, a
workshop and a mine, an oil or gas well, a quarry or any other place of extraction of
natural resources”705, even though subsidiaries and parents may not be considered
permanent establishments of each other, as the control is exercised differently.
In conclusion, modern legal definitions of companies focus on control and power, and
not only on ownership rights. The EU has established that “control also exists when the
parent owns half or less of the voting power of an entity”, when it is proved to “govern
the financial and operating policies of the entity under a statute or an agreement”706. In
our view, such ‘agreement’ can also be tacit and demonstrated through the internal
communications, for example, if evidence can be collected on instructions and
decisions, of operative nature or on human resources, that are effectively taken by the
parent company. The EU considers that a 20% of voting power justifies a presumption
of “significant influence, unless it can be clearly demonstrated that this is not the
case”707. In this context, it seems inappropriate to be blocked by old-fashioned and
limitative formal definitions –which by the way would be inconsistent within the EU,
where a Directive to avoid double taxation and lower the tax burden of companies,
considers that a company can declare itself ‘parent’ of a ‘subsidiary’ by owning only the
10% of shares of the latter, a requirement progressively reduced (after 2007 it was the
15% and, before, the 20%)708.
The lifting of the corporate veil in human rights cases can be supported by these
international standards that increasingly accept a functional approach to complete the
picture on effective control and power, to overcome the classic limited perceptions on
‘ownership’ and ‘legal personality’. In other words, a TNC might claim its organic
independence from its subsidiaries, but it can help the human rights litigator to show the
705 OECD Model Convention with respect to taxes on income and on capital. 706 COMMISSION Regulation (EC) No. 1126/2008 of 3 November 2008 adopting certain international accounting standards in accordance with Regulation (EC) No. 1606/2002 of the European Parliament and the Council, Official Journal of the European Union L 320/1 of 29 November 2008, International Accounting Standard No. 27, para. 13. 707 Ibíd., International Accounting Standard 28, para. 6. Appendix A of this Regulation finally defines “subsidiary” as “an entity, including an unincorporated entity such as a partnership, that is controlled by another entity”, a completely functional perspective that goes beyond classic criteria on ownership. 708 Council Directive 2003/123/EC of 22 December 2003 amending Directive 90/435/EEC on the common system of taxation applicable in the case of parent companies and subsidiaries of different Member States, Official Journal of the European Union L 007, 13 January 2004 p. 0041-0044, art. 3.
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functional dependence in operative and economic terms709 with the goal of convincing
the courts that, ratione personae, the parent company is also liable, similarly to internal
orders where a distinction is made between intellectual and material authors of an
offence (or at least, in terms of negligence if a lack of due control –or connivance– over
the subsidiaries can be shown).
The United States’ influence
Yet the US jurisprudence is not the subject of this research, the debate on access to
justice in the area of business and human rights has for long gravitated around the
American Alien Tort Statute, with a notable influence in the European debate. It is also
a good way to conclude these premises on corporate extraterritorial responsibilities,
before detailing the current developments in the EU. Enacted during the First Congress,
in 1789, the Alien Tort Claims Act remained in a lethargic state for two centuries. It re-
emerged in 1980 on the occasion of the judgment Filartiga v. Peña Irala revealing itself
as a useful tool for transnational human rights litigation, allowing the admission of
cases on violations of ‘the law of nations’ brought by aliens against other individuals
and, in a second wave, against TNCs. The main advantages of the ATS in conjunction
with some characteristics of the US system are these710: the ‘discovery’ facilities by
which the claimants can ask for internal documents of the defendants are also available
during the admissibility phase in form of a “jurisdictional discovery”; ‘class actions’
(collective claims) are easier and, sometimes, the absence of such possibility in the
‘natural forum’ has been sufficient for a US Court to declare itself competent; many
lawyers and law-firms accept these cases pro bono, without remuneration, sometimes
only for the prestige or on “no win – no fee” basis (which in most European countries is
even forbidden, except the UK); in many cases, Courts have accepted jurisdiction
ratione personae over subsidiaries of TNCs, even when the latter had a rather slight
709 Let’s note that an entity organically dependent can also be functionally independent; this has to be studied on a case by case basis. Obviously, the complexity of TNCs makes it impossible to find standardised relationships between parents and subsidiaries, and CSR does not necessarily leads to a clear-cut centralisation: J. BASTIANUTI: “Les dynamiques organisationnelles liées à la RSE. Le cas de la relation siège-filiale”, in Revue Française de Gestion, No. 240 (2014), pp. 115-132. 710 A comprehensive summary of this advantages: M. REQUEJO ISIDRO: “Responsabilidad civil y derechos humanos en EEUU: ¿el fin del ATS?”, in Revista para el Análisis del Derecho, 3:2011, 38 pp., at pp. 8-12. This work also includes an annex with the most relevant US jurisprudence in chronological order.
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connection with the US; and finally, punitive damages are generally generous and alien
legislation and compensation schemes can be more easily disallowed.
After a few successes with significant international impact711, the US Courts have
declared themselves competent on the basis of loose ‘connecting factors’ with the US,
following the initial decisions but without examining in depth their fundaments and a bit
erratically. The ATS suffered a first limitation in Sosa v. Alvarez-Machain (2004): for
the first time, the Supreme Court of the United States dismissed a case by laying down
three new criteria to accept jurisdiction on an alleged violation of International Law
brought by an alien. It had to be “specific, universal and obligatory”712, which generated
unexpected restrictions ratione materiae.
Some conservative judges were also increasingly unease with the political dimensions
of these cases, mainly due to the respect of foreign sovereignty and, last but not least,
expressed concerns on eventual interferences of the judiciary with the Congress in
foreign affairs by accepting new causes of action when, in fact, the ATS is only a
jurisdictional tool and remains silent of substantive causes of action. Interestingly
enough, foreign policy concerns and more serious doubts ratione loci only appeared
when an Israeli filed a suit against the Libyan Arab Republic for a terrorist attack
occurred in Haifa (Israel); the Court’s expectable dismissal constituted a premonition of
more hostile views on the ATS713. The above-mentioned doctrine of forum non
conveniens gained adepts while it became clear the potential of the ATS to sue TNCs.
The controversy developed on the status of customary international law, how it is
translated into the internal US legal order (if it becomes ‘federal common law’ and its
711 For information purposes, an off-cited case is Wiwa v Royal Dutch Petroleum: a single investor’s office with only one employee in the US sufficed to declare personal jurisdiction involving the killing in Nigeria of Ogoni activists against the extractive projects (settled out of court after it was declared admissible). Also very famous and cited by all the literature is case Doe v. UNOCAL (2001), settled out of court once declared admissible, for allegations of complicity in alleged tortures and killings in a village of Burma (Myanmar), again together with the local security forces. 712 Sosa v. Alvarez Machain concerned a Mexican national who alleged kidnapping and arbitrary detention by another Mexican national, for one day, in the course of an operation –in Mexico– orchestrated by the US Drug Enforcement Administration. S. KATUOKA and M. DAILIDAITÉ: “Responsibility of Transnational Corporations for Human Rights Violations: Deficiencies of International Legal Background and Solutions Offered by National and Regional Legal Tools”, in Jurisprudence (Mikolas Romeris University), Vol. 19 No. 4, pp. 1301-1316, at p. 1307. 713 J. A. KIRSHNER: “Why is the US Abdicating the Policing of Multinational Corporations to Europe? Extraterritoriality, Sovereignty and the Alien Tort Statute”, in Berkeley Journal of International Law, Vol. 30 No. 2, pp. 259-302, at p. 272.
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consequences), alongside the debate between ‘originalist’ and ‘modernist’
interpretations of the ATS714.
As long as almost any TNC has some kind of presence in the US, the new corporate
strategy to circumvent the generally liberal ‘personal jurisdiction’ of US courts,
consisted of putting in question the admissibility ratione materiae (the subject matter),
i.e., making manifest the lack of a sufficiently consolidated international practice to
support a liability for damages against TNCs. The result is the famous Kiobel judgment
(2013), which is the second and major limitation of the ATS. In that case715, the US
Supreme Court decided to further step back and applied stricter admissibility criteria
and started to require closer connections to the US. The ATS, according to the Court,
was suddenly presumed to be non-extraterritorial, a presumption that has to be rebutted
for a case to succeed if it “touche[s] and concern[s] the territory of the United States
[…] with sufficient force”716, not being enough a mere economic presence of TNCs in
the US. Many academics have argued that Kiobel represents a fatal restriction, though
not total, of the ATS possibilities for transnational human rights litigation, while a
historicist and limitative reading of the ATS seems to prevail at the moment717. It is
important to note that, in virtue of the amicus curiae accepted in the US, the
Commission submitted a brief in Kiobel, “acknowledging the possibility of universal
714 Being drafted back in 1789, the debate has also taken the form of virtuosistic disquisitions of legal archaeology around the original and true purposes of the ATS like if the Law was a static reality. In summary, critics affirm that, unlike the situation in 1789, the current US legal order apparently does not foresee anymore the existence of international norms which are non-federal but still binding, so that jurisdiction ratione loci should also be narrowed as done in Kiobel: “The debate about the status of international law is more directly implicated by the argument that a cause of action should not be recognised for violations of international law by aliens abroad because recognising such actions would exceed the United States’ jurisdiction to prescribe. If customary international law is federal law, then it would directly pre-empt State causes of action that exceed the United States’ jurisdiction to prescribe. But if international law were not federal law, States would be free to recognise such causes of action and place the nation in breach of its international obligations”, C. M. VÁZQUEZ: “Alien Tort Claims and the Status of Customary International Law”, in The American Journal of International Law, Vol. 106 No. 3 (July 2012), pp. 531-546, at p. 546. 715 It involved again Royal Dutch Shell activities in Nigeria and, more concretely, allegations of complicity of the parent company and its Nigerian subsidiary in the violent repression of public demonstrations against the project in the Ogoni area, with the collaboration of the Nigerian police. 716 A sound state of play of the ATS in the US, including case law and compared to Europe, in: O. De SCHUTTER, R. McCORQUODALE and G. SKINNER: The Third Pillar. Access to Judicial Remedies for Human Rights Violations by Transnational Businesses, December 2013, ICAR-CORE-ECCJ, pp. 27-30 and 34-36 (for the situation in the US, citation at p. 27). 717 “una lectura historicista del ATCA, fosilizándola en el momento en que se promulgó”, F.J. ZAMORA CABOT: “Kiobel y la cuestión de la Extraterritorialidad”, in F.J. ZAMORA, J. GARCÍA CÍVICO and L. SALES PALLARÉS: La responsabilidad de las multinacionales por violaciones de derechos humanos, Madrid 2013, Ed. Defensor del Pueblo –Universidad de Alcalá, pp. 135-148, at p. 147. We want to take the occasion to warmly thank the author for his constant support and friendship and the invitation to the book presentation.
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civil jurisdiction provided it was restricted along the same lines as universal criminal
jurisdiction, including the procedural requirement of ‘exhaustion of local and
international remedies or, alternatively, the claimants’ demonstration that such remedies
are unavailable or their pursuit is futile”718, thus confirming the conclusion we reached
before as for the forum non conveniens doctrine and its balancing to avoid a denial of
justice.
Even after Kiobel, the possibility for civil claims connected to human rights violations
is still opened in the US, though under more restrictive admissibility criteria. Anyhow,
the acceptance of civil jurisdiction under certain conditions (at least ratione personae)
should not automatically mean that the applicable law changes: we understand that the
applicable civil law should remain that of the place where the harm occurred, unless it is
clearly incompatible with human rights or other basic standards. Activists usually
request the application of the civil law of the new forum, but this is likely to ‘kill the
goose that lays the golden eggs’ and give reasons to critics that wisely raise “unlawful
assertions of universal civil jurisdiction”719. The increasing reluctance in the US about
the ATS was partly caused by the less friendly administration of G.W. Bush720 and,
somehow, by a reborn traditional “US suspicion of international laws” derived from the
fact that their independence was built upon a reaffirmation of their sovereignty, while
“Europe instead relinquished sovereignty to protect democracy”721. The EU is actually
taking the baton of these developments and, as we will see in the following section, now
is relatively opened to corporate extraterritorial responsibilities.
718 U. KOHL: “Corporate Human Rights Accountability: the Objections of Western Governments to the Alien Tort Statute”, in International and Comparative Law Quarterly, Vol. 63 (July 2014), pp. 665-697, at p. 667-668. 719 P. DAVID MORA: “The Alien Tort Statute After Kiobel: the Possibility for Unlawful Assertions of Universal Civil Jurisdiction Still Remains”, in International and Comparative Law Quaterly, Vol. 63 No. 03, July 2014, pp. 699-719, at pp. 707-713. 720 For example a Presidential order granted immunity to companies operating in Irak during the occupation by the US-leaded coalition. Bush administration also pushed back the ATS in briefs submitted by the US Government in a variety of cases as amicus curiae. It can be defined as “a comprehensive attack against the ATS, reprising arguments against admitting international law into US courts for judicial imposition abroad and raising new challenges to the extraterritorial basis of the statute itself”, J. A. KIRSHNER: “Why is the US Abdicating the Policing of Multinational Corporations to Europe? Extraterritoriality, Sovereignty and the Alien Tort Statute”, in op. cit., at pp. 276-277. 721 Ibíd., pp. 292-300. (Citation at pp. 292 and 296).
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4.2.2. Current developments in the EU
In the famous Communication […] A Renewed Strategy 2011-14 for CSR722, we find the
promise to advance in the area of access to remedies and take into account the
conclusions of experts and forums. It is our understanding that allowing access to
justice and remedies in European Courts would mark an utterly significant step forward.
If there are signs of direct or indirect involvement of an EU company in a violation of
human rights in a third country, reasonable measures should be taken to facilitate
access to justice, to some extent inspired by the American Alien Tort Statute. In terms
of new instruments, there are no big innovations within the EU; in practice, however,
there are indeed very notable opportunities that it is worth explaining.
In 2006, consistently with the approach outlined in the previous section, a French Court
warned that “l’ordre public international s’oppose à ce qu’un employeur puisse se
prévaloir des règles de conflit de juridictions et de lois pour décliner la compétence des
juridictions nationales et évincer l’application de la loi française dans un différend qui
présente un rattachement avec la France et qui a été élevé par un salarié placé à son
service sans manifestation personnelle de sa volonté et employé dans des conditions
ayant méconnu sa liberté individuelle”723. The EU has found its own way to balance the
notion of ‘ordre public international’ with the necessary respect of foreign sovereignty
and natural forums, but permitting national Courts of Member States to declare
themselves competent in cases of verified risks of denial of justice724.
At a national level, we have already referred to important decisions in the UK as a
platform to transfer the ATS debate into Europe while British Courts nuanced and
limited the forum non conveniens doctrine. We have cited above the seminal Lubbe v.
Cape, where the liability of the parent company was established despite that doctrine725.
The House of Lords acknowledged that, prima facie, England was not the natural
722 COM (2011) 681 Final, of 25 October 2011. 723 COUR DE CASSATION (Chambre sociale): Case No. 1184, 10 May 2006 : https://www.courdecassation.fr/jurisprudence_2/chambre_sociale_576/arr_ecirc_8861.html Other cases and situations will be studied in the thesis. 724 A good summary of the current situation in the EU and the way it is taking over the international leadership in this subject at: J.A. KIRSHNER: “A Call for the EU to Assume Jurisdiction over Extraterritorial Corporate Human Rights Abuses”, in Northwestern Journal of International Human Rights, Vol. 13 No. 1 (2015), 26 pp., passim. 725 Also see: TWANDA MAGAISA, A.: “Suing Multinational Corporate Groups for Torts in the Wake of the Lubbe Case –A comment”, in MACMILLAN, F. (Ed.): International Corporate Law Annual (Volume II), Oxford 2003, Hart Publishing, pp. 315-322.
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forum; nevertheless, at the second stage of the so-called Spiliada test, the Court found
out that the costs of litigation and other serious difficulties for the applicants in South
Africa would lead to an unacceptable denial of justice. If the Spiliada test became a
useful tool to initially counterbalance the forum non conveniens doctrine, at the end the
ECJ has declared the incompatibility of this doctrine with the Brussels Convention726.
On the whole, the European answer has been a partial forum necessitatis, on the basic
understanding that both article 47 of the European Charter of Fundamental Rights and
article 6 of the European Convention on Human rights require access to effective
judicial remedies, in principle without excluding third country nationals727. It is,
similarly to the ATS, a possibility under development with mixed results.
Under the umbrella of art. 82 TFEU, the general applicable regime in the EU is
essentially governed by Regulation (EC) No. 44/2001 of December 22nd 2000 (the EU
consolidation of 1968 Brussels Convention), concerning jurisdiction and the recognition
and enforcement of judgements in civil and commercial maters728, provided that the
claimant is domiciled in a Member State (art. 4). In the Resolution dated 13 March 2007
on “Corporate Social Responsibility: a new partnership”, the European Parliament
referred to this Regulation and enthusiastically asked the Commission “to implement a
mechanism by which victims, including third-country nationals, can seek redress
against European companies in the national courts of the Member States” and “organise
and promote awareness campaigns and monitor the implementation of the application of
foreign direct liability according to the Brussels Convention”729. It would appear that, in
726 “Respect for the principle of legal certainty, which is one of the objectives of the Brussels Convention, would not be fully guaranteed if the court having jurisdiction under the Convention had to be allowed to apply the forum non conveniens doctrine. […] the Brussels Convention precludes a court of a Contracting State from declining the jurisdiction conferred on it by Article 2 of that convention on the ground that a court of a non-Contracting State would be a more appropriate forum for the trial of the action even if the jurisdiction of no other Contracting State is in issue or the proceedings have no connecting factors to any other Contracting State”, Case C-281/02, Owusu v. Jackson, Judgment of 1 March 2005 (Grand Chamber), para. 38 and 46. 727 S. BARIATTI: “Diritti Fondamentali e Diritto Internazionale Privato dell’Unione Europea”, in L.S. ROSSI (a cura di): La protezione dei diritti fondamentali. Carta dei diritti UE e standards internazionali (XV Convegno Bologna 10-11 Giugno 2010 Società Italiana di Diritto Internazionale), Napoli 2011, Ed. Scientifica, pp. 397-424, at pp. 414-421. 728 Brussels I Regulation (European Convention on Jurisdiction and the Enforcement of Judgments in Civil and Commercial Matters of 27 September 1968), consolidated into EU Law through the Council Regulation (EC) No 44/2001 of 22 December 2000 on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters (Official Journal L 012 , 16/01/2001 P. 0001 – 0023). 729 European Parliament: Resolution 2006/2133 (INI) on Corporate Social Responsibility: a new partnership, 13 March 2007, pars. 34 and 40. At: http://www.europarl.europa.eu/sides/getDoc.do?type=REPORT&reference=A6-2006-0471&language=EN#title2
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the opinion of the Parliament, Regulation (EC) No. 44/2001 would allow corporate
accountability in the Courts of Member States; legally speaking, this is a very
controversial statement.
On one side, article 60730 on the domicile of legal persons offers a wide notion
(statutory seat, central administration or principle place of business). At first sight, the
obvious difficulty is, again, to link parent and subsidiary, so that article 60 does not
seem very useful. Indeed, when the legal person is not based in the EU, the link to the
parent company is of dubious helpfulness. In Vava and Others v. Anglo American South
Africa Ltd the decisional influence and direction of Anglo American Group over its
South African subsidiary was not seen as a solid connecting factor for the English
judge: “The fact that decisions taken and policies and strategies adopted by AA plc in
England influence, indeed strongly influence, the decisions taken by AASA in South
Africa does not alter the position”731. The relationship parent-subsidiary might be
insufficient to bring a case to the EU, even in the British jurisdiction732, if we must rely
solely on article 60 of Regulation 44/2001.
It is true that we find hopeful signs too: in Chandler v. Cape Plc the judge admits that
parent companies have duties of care over subsidiaries, even if not wholly-owned, at
least “in relation to what might be called high level advice or strategy”733 and
demonstrated “that in appropriate circumstances the law may impose on a parent
730 Article 60 goes: “1. For the purposes of this Regulation, a company or other legal person or association of natural or legal persons is domiciled at the place where it has its: (a) statutory seat, or (b) central administration, or (c) principal place of business. 2. For the purposes of the United Kingdom and Ireland "statutory seat" means the registered office or, where there is no such office anywhere, the place of incorporation or, where there is no such place anywhere, the place under the law of which the formation took place. 3. In order to determine whether a trust is domiciled in the Member State whose courts are seised of the matter, the court shall apply its rules of private international law.” At “Brussels I Regulation” (European Convention on Jurisdiction and the Enforcement of Judgments in Civil and Commercial Matters of 27 September 1968), consolidated into EU Law through the Council Regulation (EC) No 44/2001 of 22 December 2000 on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters (Official Journal L 012 , 16/01/2001 P. 0001 – 0023). 731 HIGH COURT OF JUSTICE (Queen’s Bench Division): Vava and Others v. Anglo American South Africa Limited –Appeal, Judgment of 24 July 2013, EWHC 2131(QB), para. 72. 732 The claimants tried to link parent and subsidiary unsuccessfully: “The article is not simply about where an entity's central administration is; it is about the entity having its central administration in a jurisdiction. Just as the other limbs of article 60(1) are about where the entity has its statutory seat or the entity principally conducts business, article 60(1)(b) is about where it carries out functions, not about where others carry out functions that affect it. […] it is not difficult to envisage circumstances in which an entity's entrepreneurial decisions are determined predominantly by the wishes of a bank or other institution on which it relies for its financial survival, but it could not, I think, really be suggested that it has its central administration where the bank or institution takes decisions.”, Ibíd., para. 71. 733 HIGH COURT OF JUSTICE (Court of Appeal, Queen’s Bench Division): David Brian Chandler v Cape Plc (Appelant), Judgment of 25 April 2012, EWCA Civ 525, para. 66.
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company responsibility for the health and safety of its subsidiary’s employees”734,
including harms occurred abroad as in the case at stake, given that the “evidence shows
that the parent company has a practice of intervening in the trading operations of the
subsidiary, for example, production and funding issues”735. This is by the way perfectly
coherent with our functional understanding of transnational business structures.
In Regulation 44/2001, there is no link based on the objet or content of the litigious,
regardless of the domicile of the parties and its current interpretation is still unclear. If it
is a collective claim or there is a number of defendants, article 6.1 of Reg. 44/2001
foresees that the domicile of one of them would be sufficient to sue in that Member
State, when there is a clear link concerning the content of the process in order to “avoid
the risk of irreconcilable judgements resulting from separate proceedings”.
Critics allege that Brussels Convention is only applicable between Member States, but it
has become clear that, as a starting point, the fundamental article 2 was clearly though
to regulate “relationships between the courts of a single Contracting State and those of a
non-Contracting State, rather than relationships between the courts of a number of
Contracting States”, as explained by the ECJ in Owusu v. Jackson736. With this in mind,
we understand that the ECJ has justified joint hearings when “there is a connection of
such kind that it is expedient to determine those actions together”737, in line with article
6.1, and there is no need for the claims to have identical legal bases so that national
courts will enjoy a interesting room for manoeuvre. The forum necessitatis doctrine,
useful to avoid both denials of justice or irreconcilable judgments, has been upheld in
two occasions by Dutch Courts, who explicitly put forward Member States’ margin of
appreciation under article 4.1 of Reg. 4/2001: “In part in view of article 4(1) of the
Brussels Regulation, this means that the question regarding whether the court has
international jurisdiction in respect of SPDC [the Nigerian subsidiary of Royal Dutch
734 Ibíd., para. 88. 735 Ibíd. However, the judge felt very uncomfortable with the idea of piercing the corporate veil, insisted on the fact that the companies are separate entities and that on a case by case basis it should be shown that, specifically dealing with one problem, the parent company had a direct implication or duty: “I would emphatically reject any suggestion that this court is in any way concerned with what is usually referred to as piercing the corporate veil. A subsidiary and its company are separate entities. There is no imposition or assumption of responsibility by reason only that a company is the parent company of another company. The question is simply whether what the parent company did amounted to taking on a direct duty to the subsidiary's employees.” Ibíd., para 69 and 70. 736 Case C-281/02, Owusu v. Jackson, Judgment of 1 March 2005 (Grand Chamber), para. 35. 737 Case C-98/06, Freeport plc v. Olle Arnoldsson, Judgment of 11 October 2007, para. 39.
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Shell]should be answered based on the Dutch Code of Civil Procedure”738. In that case,
the Court adopted a progressive stance by accepting that “the corporate veil in group
relationships may be directly or indirectly pierced, albeit under exceptional
circumstances”739 and finally concluded that the claimants succeeded to prove “a
connection to such an extent that reasons of efficiency justify a joint hearing of the
claims against RDS and SPDC”740. On a later occasion affecting the same company,
sued by a different plaintiff, a joint hearing of the parent company and the Nigeria-
based subsidiary was granted without any fear of “abuse of process”741. It must be noted
as well that the same arguments were used to dismiss a third case against Shell in the
Netherlands, because the District Court of the Hague was not convinced of the
allegations of ‘negligence’ and considered that there was no concurrence of the
“exceptional circumstances”742 necessary, as said before, even citing Lord Goff of
Chieveley –the leading judge in the above-cited Spiliada case.
This interpretation of articles 2, 4 and 6 of Reg. 44/2001 finds further support in a
British case, where the domicile in England of the parent company was sufficient for the
judge to issue a worldwide injunction to freeze assets of the parent company as “there
was a real risk that Monterrico would not retain assets within the jurisdiction sufficient
to meet any claim against it or Rio Blanco”743, being the latter its subsidiary registered
in Peru and thus confirming the subsidiary civil liability of the parent company.
Moreover, we shall highlight that the British judge justified its jurisdiction ratione
personae citing the interpretation of article 2 of Regulation 44/2001 made by the ECJ’s
in above-mentioned case Owusu v. Jackson744. In spite of all these promising
developments, there are also some setbacks. For example, in a different case the ECJ
decided that “Article 6(1) of Regulation No 44/2001 must be interpreted as meaning
that it is not intended to apply to defendants who are not domiciled in another Member
738 RECHTBANK DEN HAAG (Court of The Hague): Plaintiffs 1 and 2 (Oruma) and Vereniging Milieudefendie v. Royal Dutch Shell and Shell Petroleum Development Company of Nigeria Ltd, Judgment of 30 December 2009, Case No. 330891/HA ZA 09-579, para. 3.4. 739 Ibíd., para. 3.3. 740 Ibíd., para. 3.6. 741 RECHTBANK DEN HAAG (District Court of the Hague): Friday Alfred AKPAN (Ikot Ada Udo) and Vereniging Milieudefensie v. Royal Dutch Shell Plc and Shell Petroleum Company of Nigeria Ltd, Judgment of 30 January 2013, Case No. C/09/337050/HA ZA 09-1580, para. 4.1. 742 RECHTBANK DEN HAAG (District Court of The Hague): Fidelis Ayoro OGURU and Alali EFANGA (Oruma) v. Royal Dutch Shell Plc and Shell Petroleum Development Company of Nigeria Ltd, Judgment of 30 January 2013, Case No. C/09/330891/HA ZA 09-0579, para 4.53. 743 HIGH COURT OF JUSTICE (Queen’s Bench Division): Guerrero and Others v. Monterrico Metals Plc and Rio Blanco Copper SA, Judgment of 16 October 2009, EWHC 2475 (QB), para 28. 744 Ibíd., para. 23.
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State, in the case where they are sued in proceedings brought against several defendants,
some of whom are also persons domiciles in the European Union”745, inconsistently the
increasing case-law commented above.
In sum, the interpretation of Reg. 44/2001 shows some possibilities for transnational
human rights litigation even though its interpretation is unclear at some points. On the
other hand, since human rights breaches would basically lead to extra-contractual civil
responsibilities, the above-mentioned regulation has to be read together with Reg.
864/2007 (Rome II746): though being separate and having different purposes, the ECJ
has clarified that consistency between both regulations should be ensured747. Rome II
clearly settles that the law applicable is that of the country where the harm occurs (art.
4) as a general rule, but this is not an impediment to accept jurisdiction in case of risks
of denial of justice or irreconcilable judgments, if the Court applies the foreign law at
stake: as we explained before, the civil corollary of applying the law of the new forum
could lead to an “unlawful assertion of universal civil jurisdiction”748 and might
undermine the defendants’ fundamental rights. In general terms, we insist that accepting
jurisdiction should not lead to a change on the applicable law, unless it is clearly
incompatible with human rights or basic judicial guarantees.
In fact, art. 5.3 of Reg. 44/2001 also enshrines the general rule that the law applicable is
that of the place where the harmful event occurred. But the ECJ –contributing to the
general confusion– has established that article 5.3 of Reg. 44/2001 “must be understood
as being intended to cover both the place where the damage occurred and the place of
the event giving rise to it, with the result that the defendant may be sued, at the option
of the claimant, in the courts of either of those places”749. This should be valid also
745 Case C-645/11, Land Berlin v. Ellen Mirjam Sapir et al., Judgment of 11 April 2013, para. 56. 746 REGULATION (EC) No 864/2007 OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL, of 11 July 2007, on the law applicable to non-contractual obligations (Rome II), Official Journal L-199/40 of 31/07/2007. 747 Despite being a difficult equilibrium, which becomes manifest in the following writing style: “It must be stated next that, although it is apparent from recital 7 in the preamble to Regulation No. 864/2007 that the European Union legislature sought to ensure consistency between Regulation No. 44/2001, on the one hand, and the substantive scope and the provisions of Regulation No. 864/2007, on the other, that does not mean, however, that the provisions of Regulation No. 44/2001 must for that reason be interpreted in the light of the provisions of Regulation No. 864/2007. The objective of consistency cannot, in any event, lead to the provisions of Regulation No. 44/2001 being interpreted in a manner which is unconnected to the scheme and objectives pursued by that regulation”. Case C-45/13, Andreas Klainz v. Pantherwerke AG, Judgment of 16 January 2014, para. 20. 748 See supra, footnote 719. 749 The Court was probably not thinking of transnational human rights litigation. Case C-45/13, Andreas Klainz v. Pantherwerke AG, Judgment of 16 January 2014, para. 23.
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when one of these places is not a Contracting State, in view of the interpretation of
article 2 made at Owusu v Jackson. Besides, in cases of environmental damage, even
Rome II provides that the claimant can “base his or her claim on the law of the country
in which the event giving rise to the damage occurred” (art. 7). The exact meaning of
‘giving rise’ and the situations to which it could be applied remains obscure: could it be
extended to the operative decisions taken in the headquarters of TNCs that ‘give rise to’
eventual human rights violations in the field? Are human rights “overriding mandatory
provisions” in accordance to article 16 of Rome II? Or perhaps human rights, as a
common interest of the international society, might fit into article 26 referred to the
“ordre public of the forum”? It is commonplace that the damages usually don’t take
place in Europe, but the “place of the event giving rise to it” might constitute a
possibility to show a link with EU-based parent companies, to be added to other
opportunity niches in the current regulations. For example, article 7 of Rome II is an
open window that many authors wish to see extended to cases beyond ‘environmental
damages’750.
To cite a more recent norm, the domicile of the defendant is still a key requirement in
Regulation (EU) 1215/2012, in force since 10 January 2015. It could be argued that this
territorial link should decline in exceptional circumstances, such as in cases of human
rights violations. We might recall that the Commission in 2010 had a more ambitious
proposal to improve this regulation751, even though a general rule on “related actions” to
allow extraterritorial accountability of European companies wasn’t either considered,
not even in exceptional terms in cases of human rights violations. All in all, the recast
regulation 1215/2012 maintained the territorial link based on the domicile of the
defendant, but in the overall respected and preserved a good amount of flexibility at the
level of Member States and their own margin of manoeuvre, which is a strange option
to the extent the European integration heads to uniformity and harmonisation. Perhaps
the lack of political will and consensus is behind these mixed results and the discreet
and ambiguous role of the Commission. Whatever the case may be, we have seen that
there are interesting examples of this margin of appreciation that show a certain
750 V. VAN DEN EECKHOUT: “Corporate Human Rights Violations and Private International Law. The Hinge Function and Conductivity of PIL in Implementing Human Rights in Civil Proceedings in Europe: A Facilitating Role for PIL or PIL as a Complicating Factor?”, in Contemporary Readings in Law and Social Justice, Vol. 4 No. 2 (2012), pp. 178-207, at p. 194. 751 COM (2010) 748 Final.
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potential for transnational human rights litigation, with the leading role of British and
Dutch courts.
It is early to know to what extent the margin of member States will be sufficient to cope
with the deficiencies of Regulations 44/01 and 1215/2012 with respect to the direct or
indirect involvement of EU companies in human rights violations in third countries. A
different option would be to increase the relative weight of Reg. 864/2007 to
counterbalance some unclear aspects of Reg. 44/2001. A case by case and a State by
State scenario is, in our view, unlikely to create solid bases and, sooner or later, a
revision will be necessary at the EU level (and well beyond a simple amendment). For
different reasons, it doesn’t seem realistic to expect a modification in the near future. In
addition to the technical difficulties, to accept new jurisdiction criteria (something like a
“related action” connection to sue in European Courts) clearly requires a wider political
will to support civil suits for human rights violations even when the facts occur in third
countries or when there is not a person involved with a clear European connection.
Finally, the obligation to provide with free legal assistance if necessary, as a
fundamental tool to ensure an effective access to justice, derives from the European
Convention on Human Rights. The Convention does not explicitly envisage it in civil
proceedings; but the ECHR has clarified that under article 6.1 of the treaty it can be
considered as an element of the right to a fair trial, very particularly when exceptional
circumstances arise becoming evident a high risk of inequality of arms between the
parties in inter partes proceedings. In the case Steel and Morris v. The United Kingdom,
the European Court Of Human Rights stated that “the denial of legal aid to the
applicants deprived them of the opportunity to present their case effectively before the
Courts and contributed to an unacceptable inequality of arms” which in turn may lead to
the violation of substantial human rights such as, in that case, freedom of expression in
terms of proportionality: “If, however, a State decides to provide such a remedy to a
corporate body, it is essential in order to safeguard the countervailing interests in free
expression and open debate, that a measure of legal aid rendered the defamation
proceedings unfair, in breach of art. 6.1. The inequality of arms and the difficulties
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under which the applicants laboured are also significant in assessing the proportionality
of the interference under Article 10” (and we presume that many other articles). 752
Also the Charter of Fundamental Rights of the European Union, in its article 47.3 states
that “legal aid shall be made available to those who lack sufficient resources in so far as
such aid is necessary to ensure effective access to justice”. The question is the practical
degree of coverage: the aspects covered and if it is a right of any person trying to file a
lawsuit in the territory of the EU regardless of his or her nationality and domicile.
Directive 2003/8/EC to improve access to justice in cross-border disputes by
establishing minimum common rules relating to legal aid for such disputes753 could help
us answering these questions. There was no doubt for all Union citizens and third-
country nationals who habitually and lawfully reside in a Member State (recital 13 of
the Directive) and, to comply with non-discrimination principle, article 4 provides that
any member State will offer this legal aid to any Union citizen or third-country national
with domicile in another member State. This condition significantly reduces the
possibilities to sue, even more when it is not clear if the requirement is fulfilled once an
application of legal residency is filed or only when it is approved. In sum, it is not a
useful tool for our purpose as it is aimed at clarifying the right of Union citizen or third-
country national legally domiciled to have access to legal aid in any member State
different from that of his residence or nationality.
This solves many problems inside Europe, but doesn’t give an answer to our question to
the extent the situations involving third States as scenario of the dispute or origin of at
least one of the parties in the proceeding. The two Hague Conventions, that is, first of
all Convention II (March 1954) 754 on civil procedure and Convention XXIX (25
October 1980) on international access to justice basically obliges to provide in this
regard the same national treatment to nationals of any of the parties to the Treaty.
Convention XXIX of 1980 develops this idea and requires nationals of contracting
States and persons habitually resident in a contracting State to be treated, for the
purposes of legal aid in court proceedings in each contracting State, as if they were 752 ECHR: Steel and Morris v. The United Kingdom, Case 68416/01, 15 February 2005 (Final 15 May 2005), par. 72 and 95. In the same direction see the Case Airey v. Ireland A32/1979 which also started to extend free legal aid to civil cases (in the case of an indigent). 753 COUNCIL DIRECTIVE 2002/8/EC of 27 January 2003, accessible at http://eur-lex.europa.eu/legal-content/en/ALL/;ELX_SESSIONID=1tnZJRCG7TQTQH98bM0vwbKFny1Tzv2RQjXZYtNvPSN7Q66TjR2w!-1249367065?uri=CELEX:32003L0008 , Recital 13 read together with articles 1 and 4. 754 Ratified by Austria, Belgium, Denmark, Finland, France, Germany, Italy, Luxemboug, the Netherlands, Portual, Sain and Sweden.
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nationals of and resident in that State. The Commission therefore indicated that it was
highly desirable to extend the ratification of 1980 Hague Convention755 in order to
advance in the solution of the problem and a proposal for Recommendation was
drafted756. Well accepted by the European Parliament and by the Economic and Social
Committee, it didn’t convince the Council of member States: the public debate focused
on the extent to which non-European citizens would benefit much more than Union
citizens from the treaty. The accession to 1980 Hague Convention on international
access to justice might seem a good shortcut but is actually, in the light of our
explanation, just a quick political fix without expectations of long-term success because
of the technical problems. To sum up757, the regulation of access to justice by the
Directive 2003/8/EC has two remaining loopholes: a) the eligibility criteria ratione
personae and substantive admissibility, still unclear for third countries (we are far from
some kind of “alien tort statute”); b) and secondly, article 3 of this Directive completely
forgets legal persons.
The Commission has somehow understood that we may dare expanding the traditional
mould of admissibility criteria, among which we should reach a new balance in cases of
human rights violations. This way, we would give better protection to the weaker party
in these processes, especially when local judicial systems show structural deficiencies
and, of course, provided there is a direct or indirect involvement of an EU-based
Company. This is a logical a measure in a world of increasingly integrated economies
and communications, but requires a clear political will. The EU has the opportunity to
show the way and part of the work concerning access to justice (detecting the main
issues at stake) is done. For the time being, the European initiatives in this regard have
been shy but, as we have seen, the EU has discreetly preserved a sufficient margin of
appreciation to allow Member States to go further.
755 To see the updated status of signatures and ratifications: http://www.hcch.net/index_en.php?act=conventions.status&cid=91 756 COM (86) 610 Final, of 13 November 1986. 757 This paragraph is based on the interesting analysis of shortfalls and possible improvements at: M. REQUEJO ISIDRO: “Access to remedy: abusos contra derechos humanos en terceros Estados, ¿Justicia civil en Europa?”, in F.J. ZAMORA, J. GARCÍA CÍVICO and L. SALES PALLARDÉS (Eds.): op. cit., pp. 79-107.
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4.3. The role of the EU and the post-2015 agenda
Taking into consideration this specific analysis of CSR in the EU, it is clear that its
contents are still under development. CSR grows somehow disorderly for different
reasons: first, the interaction between EU institutions, since the Parliament, the Council
and the Commission have different priorities and working methods; because Member
States themselves show diverse understandings and speeds; and because it has spread to
different policies and law-fields, apparently without a logical storyline behind –we
mean, hardly predictable –with good progresses alongside failures or omissions.
Besides, we face a complex mix of hard and soft law, the question of access to remedies
is still pending as well as its future interaction with classical human rights instruments.
Only time will tell how the traditional ex-post and vertical human rights mechanisms
can be completed by CSR, defined as a mostly ex-ante (preventive) and horizontal
approach758. We started this research raising questions such as: What are the differences
and similarities between the EU and other international organisations in promoting
CSR? How has operated the interaction between them? To what extent the EU leads the
way and in which aspects? What have been its successes and deficiencies, to evaluate its
potential leadership in the international scenario? Since when and how is CSR inserted
into EU policies? Could we make emerge CSR issues before it was labelled as such?
Are there original aspects in the European CSR? What is the legal value of the diverse
initiatives? In short, the five W’s of CSR, as a journalist would say: who, what, where,
when and why, and of course, how –which is a transversal question.
We have answered most of these questions au fur et à mesure. Provided certain caution
and criticism advisable in any research, we do not find justified the excessive fears with
regard to soft methods to complement the human rights regime: shall we recall, for
example, that in the CFSP “si può tranquillamente affermare, ad esemplio, che il
contributo alla pace dato dalla Comunità europea con i suoi mezi “soft” ed indiretti è
stato molto più importante di quello dato sin qui dall’Unione con i suoi strumenti diretti
di politica estera e militare”759. The following concluding remarks are aimed at tying
up some loose ends on the role of the EU in promoting CSR. We divide it into two
758 See Chapter I (Section 3) for our discussion on the emergence and definition of CSR. 759 L.S. ROSSI: “L’Unione Europea”, in L.S. ROSSI (a cura di): Le Organizzazioni Internazionali come Strumenti di Governo Multilaterale, Milano 2006, Giuffrè Ed., pp. 9-48, at p. 41.
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different categories: institutional aspects that mark its development, and substantive
contributions that might shed light on its potential.
4.3.1. The role of the EU: some institutional remarks
As for the general principles and broad spectrum initiatives, it is evident that the first
achievements fall on international organisations with universal scope (first part of this
research). It seems in some measure (and for instance) that the EU has followed the path
set out by those other organisations at a universal level and has, later, tried to lead the
way with mixed results. The European strategy is explicitly built upon the OECD
Guidelines for Multinational Enterprises, the UN Guiding Principles, the eight core ILO
conventions, and the ISO 26000, which remain the most important references. The EU
readily acknowledges this inspiration but the Commission is keen to clarify that “[t] he
EU role here does not duplicate the role of the UN Working Group or other existing
mechanisms”760.
Indeed, the EU is a unique organisation in the international scenario so that, intuitively,
there must be institutional particularities with an influence on the development of CSR.
The high degree of integration, now both economic and political, renders it more and
more difficult to reach the equilibrium between a market-oriented and a rights-based
Europe. CSR is somewhere in between. To the equation we have to add the hackneyed
discussion on legitimate, democratic but efficient institutions. As we have seen, since
2000 the EU institutions have embraced the so-called new modes of governance, a soft-
law fashion extended to many other policy areas after the entry into force of the Treaty
of Lisbon in 2009. Analytically and institutionally, the discussion hereafter refers to a
variety of debates and subjects concerning the EU institutional building: at first sight,
some might seem off-topic, but all have an impact on the way in which CSR has been
developed, starting with an analysis of governance issues to continue with the complex
interaction between the Commission, the Parliament, the Council and the ECJ.
We have already signalled the pros and cons of soft law, in relation to CSR; soft law,
however, has an institutional dimension: the current informal modes of governance. It
760 SWD (2015) 144 Final, 14 July 2015, on Implementing the UN Guiding Principles on Business and Human Rights –State of Play, p. 6.
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goes without saying that almost any kind of informal governance has been put in
practice during the initial implementation of the CSR agenda, to supposedly increase the
efficiency and democratic character of the institutions’ work. The alleged greater
transparency and inclusiveness of the decision-making process has to be nuanced:
nobody would be against hearing a myriad of stakeholders, but criteria on their variable
selection are loose and obscure; no one would deny the political helpfulness of more
flexible or even amorphous structures for negotiations but, as a consequence, we face
more uncertain and unpredictable outcomes. The process can actually become slower,
more expensive and even “reduce the quality of the decisions by driving those decisions
to those that are the lowest common denominator”761. As with soft law, a particular
product of informal governance, we already stated that problems are not the tools but
the way they are used, the guarantees to ensure that these “devices” are effectively open
and inclusive762.
We might also argue that human rights precisely constitute an area in which the need of
uniformity tends to discourage the adoption of informal modes of governance. After all,
if we are speaking about democratic institutions and fundamental rights, we would all
agree that they should be effective with the existing mechanisms, even in their
complicated interaction with business activities. What are then the reasons for the
success –or at least, growth– of these new informal governance schemes behind CSR?
Three law-making changes have simultaneously developed in the EU: a horizontal
bureaucratisation, a vertical Europeanisation and a lateral privatisation, which all
together create a “3D governance space” 763 in such a way that the EU is somewhere in
between with the potential of intervening in the three dimensions. This evolution has led
to a “complex [that] may work more effectively, while still bestowing mediated
legitimacy, by casting a hierarchical shadow over more (though never fully)
autonomous lawmakers, instead of trying to steer them too heavily or too directly, for
761 B. GUY PETERS: “Forms of Informal Governance: searching for efficiency and democracy”, in T. CHRISTIANSEN and T. LARSON (Eds.): The Role of Committees in the Policy-Process of the European Union. Legislation, Implementation and Deliberation, Cheltenham (UK) – Northampton (USA) 2007, Edward Elgar Ed., pp. 39-63, at p. 45. 762 This confirms the need of looking not only at formal aspects, but also at the material practice: “Hence, again we need to examine the consequences of informality, both empirical and normative, rather carefully”. Ibíd., p. 60. 763 J. CORKIN: “Constitutionalism in 3D: Mapping and Legitimating Our Lawmaking Underworld”, in European Law Journal, Vol. 19 No. 5 (September 2013), pp. 636-661, passim.
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which it anyway lacks the capacity”764. Being perhaps disappointing, in view of the
challenges of globalisation and the factual power of MNCs, it is utterly important to
realise this lack of capacity to defend human rights with traditional hard moulds in
some cases, and rather take a pragmatic approach to work proactively and take the most
of the available opportunities to influence on the new global order in defence of human
rights. This does not mean to relinquish other mechanisms for the protection of human
rights.
The EU seems to have taken up this institutional role, abandoning positivist and
theoretic fears on the procedures followed, despite the obvious risks that refer to
democracy, legitimacy, inclusiveness and participation.
We are far from reinventing the wheel concerning governance; we will only draw
attention to the usual misunderstanding that semantically links it to types of government
when, in fact, it has more to do with forms of policy making or exercising power. The
study of CSR reveals linkages between public governance and corporate governance,
which according to us have an unavoidable human rights component. In this sense we
dare to propose a rather simple but pragmatic definition of governance: ‘the behavioural
and procedural aspects of the institutional exercise of power, public or private, allegedly
based on selected ethical values of the Community at stake’. In this way, we include the
public and private dimensions, the human rights core ingredients and motivations, and
the fact that CSR predominantly consists of practices (behaviours and procedures) to
prevent human rights abuses.
As it happens with soft law, it is difficult to take a scientific stance on to what extent
informal governance exclusively responds to neo-liberal wishes or, to a certain extent,
also to other factors like a historical elitist inertia in the European integration project
(when doubts appear as to the degree of inclusiveness of decision-making processes). In
this respect we warn on the usual confusion between political accountability and legal
responsibility, very frequently mixed up for ideological purposes. The Commission
herself makes an ambiguous mishmash of ex-ante and ex-post responsibilities
“tend[ing] to blur accountability with issues of representative deliberation”765.
Paradoxically, it is the success of the EU that has led to its increasing and
764 Ibíd., p. 658. 765 M. BOVENS: “Analysing and Assessing Accountability: A Conceptual Framework”, in European Law Review, Vol. 13 No. 4 (July 2007), pp. 447-468, at p. 453.
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unprecedented administratisation. This takes us to the borders of the treaties: articles
288 and 290 TFEU establish an apparently clear-cut distinction between legislative and
non-legislative acts, their respective legal effects and the delegation of powers to the
Commission, but they insufficiently address the operational tasks that need to be
accomplished to deal with this increasingly specialised EU administration.
In a very interesting precedent-setting case, precisely related to the cooperation in the
social field (employment and working conditions) and migration policies, the ECJ
clearly distinguished between competences and powers: while it declared void a
Commission initiative to initiate a consultation procedure on migration policies because
it lacked competences, it nevertheless dismissed the application of various Member
States worried about the leading role and organisational tasks of the Commission in
other social issues when it decides to start a consultation process (so usual in CSR). The
ECJ strongly emphasised that “where an article of the EEC Treaty –in this case Article
118– confers a specific task on the Commission it must be accepted, if that provision is
not to be rendered wholly ineffective, that it confers on the Commission necessarily and
per se the powers which are indispensable in order to carry out that task”766. The
understandable fear of Member States as to the level of actual influence of the
Commission found no legal support but, as early as 1987, anticipated the problem of the
relative power of the Commission only by coordinating consultations, despite the fact
that, of course, it could not be proved to what extent the Commission would inform the
final outcome, as it happens with soft law, soft governance and CSR. In other words, the
informal but real power derived from the institutional role of the Commission, though
merely procedural, does not seem a juridifyable matter for the Court, naively
concluding that “[s]ince the Commission has a power of a purely procedural nature to
initiate a consultation procedure it cannot determine the result to be achieved in that
consultation”767.
We insist that this administrative growth is the result of a relative success of the EU,
even though it is a ‘double-edged sword’. Its combination with new governance modes
has generated a plurality of networks and agencies and other bodies in such a way that,
in no small measure, it develops into a soft administratisation. Informal governance
766 Joined Cases 281, 283 to 285 and 287/85, Germany, France, Netherlands, Denmark and United Kingdom v. Commission, Judgement of 9 July 1987, para 28. 767 Ibíd., para. 34.
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makes it easier to operationalise the increasing administrative needs of the EU, not
bearable anymore by the Commission on her own because of their number, specificity
and technical character. In sum, informal governance softens but allows the deepening
of market integration up to ever higher levels that need a proper administration.
CSR has to be contextualised in the wider framework of market integration.
‘Responsible’ market integration has therefore to combine merely economic regulation
with CSR-informed governance, in a relatively flexible manner that facilitates getting
closer to an “ecosocial market economy”, in the words of Mrs. Ferrero-Waldner,
European Commissioner for External Relations back in 2007768. Truly strict
interpretation of the treaties would be likely to impede certain levels of harmonisation
of the internal markets, partially achieved through soft law and new governance forms,
most prominent among which are also agencies and networks. The enlargement
eastwards has also had an influence since the negotiations in Brussels become tougher,
making soft harmonisation more attractive. The Commission thus circumvents legal
limits to its competences, as regards implementation, and has taken the opportunity to
go beyond in certain policies –like CSR–, through soft strategies in view of the lack of
proper powers under the treaties. Another example are EU networks of regulators with
more or less informal characteristics: “lacking the legal instruments to coordinate
policies in certain sectors, the Commission would primarily attempt to indirectly expand
the range of issues that fall under supranational competences by coordinating networks
of regulators”769. In the area of CSR, this can explain the emphasis of the Commission
in apparently grey ‘coordination tasks’ that we defined as ‘information and promotion
strategies’770. These information and promotion strategies bring the occasion to gather
with and influence public and private regulators: informal peer reviews with Member
States or other national authorities, along with private-led organisations with standard-
setting vocation and companies themselves.
Certainly, CSR has interwoven a great number of stakeholders and specialists,
allocating funds for research and policy papers. We have cited a number of reports and 768 Cited by: V. BACHMANN and J.D. SIDAWAY: “Zivilmacht Europa: A Critical Geopolitics of the European Union as a Global Power”, in Transactions of the Institute of British Geographers, New Series, Vol. 34 No. 1 (January 2009), pp. 94-109, at p. 103. 769 Moreover, the Commission profits from the fact that Member States have already delegated powers to their respective national institutions and, later, the Commission informally coordinates them with a clear influence on the outputs. M. ZINZANI: Market Integration through Network Governance: the Role of the European Agencies and Networks of Regulators, Cambridge 2012, Intersentia Ed., p. 25. 770 Refer to Chapter III, Section 2.1.
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studies on different aspects of CSR, in which the external influence of ‘stakeholders’
and ‘experts’ is sometimes direct, as when the study is produced by external institutions
like the University of Edinburgh (the Study of the Legal Framework on Human Rights
and the Environment Applicable to European Enterprises Operating outside the
European Union) or Commission’s study on Responsible Supply Chains, tasked to a
group of research projects under a services contract for the High Level Group on
Corporate Social Responsibility. In some other cases, the external influence is indirect
and less easy to be traced such as the meetings and networking events that precede, for
example, the sectoral CSR handbooks published by the Commission. In sum, we have
mentioned reports, strategies, frameworks and guidelines, being the most important the
Renewed EU Strategy for 2011-2014.
These documents were not without consequences, as we have seen a partial –at times
audacious- implementation. We have even shown its permeation into proper EU Law.
From the companies’ perspective, it starts to be risky to turn a blind eye to this incipient
regulatory scenario and the future agenda. In this sense, we have observed that the
Commission has moved from a framework phase to a more strategic and active phase
after 2009. Precisely at this step it is necessary to wonder on the share of external
influences. It appears almost impossible to gauge the real impact of stakeholders,
experts and other informal actors about whom doubts persist in terms of legitimacy,
conflict of interests, and supervision.
It must be said that this institutional modus operandi is not limited to CSR; it reflects by
the way a wider political dynamic in the EU. Recourse to experts and the agencification
of the EU are explained by the above-mentioned specialised administrative tasks that
the Commission no longer performs due to its number and technical character. This
research is not centred on this particular phenomenon, although it deserves –en passant–
a short comment since experts and other unknown actors have contributed to shape CSR
in the EU. CSR is also, in part, the result of this cumulative technocratic
administratisation of the EU, based on the passivity of Member States –rather than an
active support: a “permissive consensus” or a “seductive formula of political
abdication”771. The legal responsibility, in cases of breach of the treaties, is likely to fall
771 M. EVERSON: “The European System of Financial Supervision: a Technology of Expertise”, in M. AMBRUS, K. ARTS, E. HEY and H. RAULUS: The Role of ‘Experts’ in International and European
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on the Commission as the most usual formal decision-maker; nevertheless, the political
accountability will be vaguer and vaguer. Challenges will be insurmountable for social
scientists eager to contextualise their researches in “their socio-economic terrains, [as]
we risk not seeing how those who supposedly influence policies (experts) are
themselves also influenced by material, ideational and institutional considerations”772.
The objective is not to discuss the expertise of experts or the representativity of
particular stakeholders, but to remain critical in terms of, respectively, their alleged
scientific neutrality or full inclusiveness: the EU should establish some kind of
“legitimacy test”773 or double-check procedure or administrative filter, even more
important taking into account the international influence of the EU when it officially
takes a stand.
If we may be allowed to incur a short philosophical excursus, it is our personal opinion
that soft governance, manifesting itself in the form of soft norms, with the concrete
example of CSR, all shall be the materialisation of changing mentalities, a process that
will have to be confirmed in the longue durée, in the words of the French historian
Braudel. We have already cited another French thinker, Foucault, to warn on the
discourses of truth and its political management774. The multiplication of experts, the
super-specialisation, and their institutional reflection (bodies, agencies,
multistakeholder forums, etc.) respond, in our view, to a general crisis of legitimacies.
The end of the Cold War and the progressive achievements of welfare states have led to
a partial de-politicisation of western societies. Postmodernism is also behind the
questioning of almost any source of legitimacy, in particular in the political scene. Even
democracy is suffering this crisis of legitimacies in the sense that its operative bases are
under discussion: for example, “deliberative” formulas gain adepts in the era of internet.
Only the scientific and technical legitimation seems to resist and might explain a
scientificization or technification of politics (the “political abdication” to which we
referred before). This is not to discuss the progress of sciences, today better than
yesterday in the way they describe and explain nature; however, it seems a bit
Decision-Making Processes. Advisors, Decision Makers or Irrelevant Actors?, Cambridge 2014, Cambridge University Press, pp. 315-340, at p. 334. 772 This is one of the conclusions of a study on the profiles of the experts who took part in the Larosière Commission for the reform of the European financial system between 2009 and 2010. See K. KNIO: “The Role of Experts and Financial Supervision in the European Union: the De Larosière Commission”, in Ibíd., pp. 341-360, at p. 359. 773 C. DEVAUX: “The Role of Experts in the Elaboration of the Cape Town Convention: Between Authority and Legitimacy”, in European Law Review, Vol. 19 No. 6 (November 2013), pp. 843-863. 774 Supra, footnote 583.
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illusionary to express it in ontological terms, as if we were ‘closer to truth’ and this
being a self-sufficient and definitive authority to shape policy making: we forget that
tomorrows’ science will also be better than todays’ and it is not a linear ontologically-
finalistic but an arborescent development that also entails uncertainty775.
As is apparent, institutional soft governance may entail strong powers, with its lights
and shadows. We have seen that a lateral question in this regard is the identification of
the actual decision-makers. Networks and agencies share the same institutional
problems: legitimacy, transparency, and supervision. These can perfectly be
extrapolated to CSR policies, as it might seem that the real decision-makers avoid
spotlights, escape accountability. There are reasonable doubts on who is really making
decisions, on the share of the institutional input in the final guidelines,
recommendations, communications and –more importantly- directives. It has been
studied that “the activist role of the ECJ”776 has been fundamental to control the
decisions made by agencies and this case-law finally crystallised in the current wording
of article 263 TFEU that openly provides the review of “the legality of acts of bodies,
offices or agencies of the Union intended to produce legal effects vis-à-vis third
parties”. Article 263 TFEU repeatedly uses the expression “intended to produce legal
effects”: this constitutes a further recognition of the ECJ case law in relation to the
scrutiny of soft law, as explained elsewhere in this work, confirming that it is
impossible to return narrow positivist positions based on formal legal distinctions. We
have to adopt a more functional perspective to study the actual effects of institutions’
work, in a broad sense –the term ‘bodies’ invites to a lax interpretation as for the
European institutional building. Besides, article 290 TFEU (comma 2 a)) includes an
extra precaution, the permanent threat of the European Parliament or the Council “to
revoke the delegation” of powers to the Commission at any moment. These provisions
therefore adapt the treaties to the growing administrative complexity of the EU in the
775 As Thomas Kuhn stated: “A scientific theory is usually felt to be better than its predecessors not only in the sense that it is a better instrument for discovering and solving puzzles but also because it is somehow a better representation of what nature is really like. One often hears that successive theories grow ever closer to, or approximate more and more closely to, the truth. […] There is, I think, no theory-independent way to reconstruct phrases like ‘really there’; the notion of a match between the ontology of a theory and its ‘real’ counterpart in nature now seems to me illusive in principle. […] I do not doubt, for example, that Newton’s mechanics improves on Aristotle’s and that Einstein’s improve on Newton’s as instruments for puzzle-solving. But I can see in their succession no coherent direction of ontological development.” T. S. KUHN: The Structure of Scientific Revolutions, Chicago 1970 (Second Edition enlarged), University of Chicago Press, Vol II No. 2, p. 206. 776 E. MADALINA BUSUIOC: “Blurred areas of responsibility: Europen agencies’ scientific ‘opinions’ under scrutiny”, in M. AMBRUS, K. ARTS, E. HEY and H. RAULUS: op. cit., pp. 383-402, at p. 387.
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understanding that it is no longer a mere question of competences, but a problem of
implementation and daily exercise of powers. At the same time, the ECJ seized the
political opportunity777. The initial development of CSR confirms this role of the ECJ:
firstly, to support positive developments made by Member States that included early
social and environmental clauses in public procurement (cases against France, the
Netherlands, Finland and Austria778); and secondly, to allow the judicial review of soft
law regardless of formal nomen iuris distinctions before this was contemplated in the
TFEU779.
In any case, the ECJ will indirectly scrutinise soft governance through the eventual
revision of soft law, if intended to have legal effects. However, this method focuses on
the content, i.e., on the material product of the new modes of governance but not on the
validity of the institutional procedures behind and, therefore, constitutes a very indirect
and weak control of the institutional working methods. Diffuse and hardly identifiable
decision-makers may generate confusion in a system where “not only is the demos
absent but –like Kafka’s Castle perhaps– there is also no one in charge who can ever be
held responsible” 780.
On another front, with this general institutional problematics in mind, it is well-known
that the EU is not institutionally homogeneous: we have studied various documents
emanating from the Commission (most of them), and also from the Council and the
Parliament. Equally important has been the parallel ECJ case-law to reassure us on the
eventual judicial review of soft law and soft governance. The institutional interplay
inside the EU also determines its potential role and it is time to make some final
remarks in this respect. For instance, the Commission is the protagonist in the
development of CSR although we have to recall that this is the result of an evolving
opinion influenced, in some particular cases, by the practice of advanced EU Member
States or, last but not least, by some US initiatives.
Again, as shown, the Commission has not always been the ‘torchbearer’. Nor is the
European Parliament free of contradictions. In the overall, the EP looked like the most
progressive EU institution in terms of CSR. The cited EP’s reports on CSR and its
777 Ibíd., p. 389. 778 Please refer Chapter III, Section 3.1. 779 Please refer Chapter IV, Section 1. 780 C. SHORE: “European Governance or Governmentality? The European Commission and the Future of Democratic Government”, in European Law Review, Vol. 17 No. 3 (May 2011), pp. 287-303, at p. 301.
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proposals for amendments to the studied directives support a harder and justicialist
approach, generally contrary to soft governance and technocracy. In the heat of the
crisis, while CSR reports include pompous statements on the need to transparently
regulate corporate governance, the EP “enthusiastically welcomed the ESFS [European
System of Financial Supervision], discarding its long-standing opposition to further
consolidation of EU technocratic governance, in particular by means of supranational
agencification”781.
As for CSR, the role of the Council should not be underestimated either. We tend to
forget that the EU is, to a lower degree than years ago, but still, an international
organisation composed of “High Contracting Parties”: “ il metodo intergovernativo
tende periodicamente a riapparire nella realtà della vita istituzionale”782. An obvious
example of the remaining intergovernmental nature of the EU is the accession procedure
settled by article 49 TEU which establishes that “the conditions of eligibility agreed
upon by the European Council shall be taken into account”, a language that does not
accurately show how important the Council is (let’s recall the Copenhagen criteria). The
infringement procedure is a less obvious but perfect example of the remaining
intergovernmental and classical international procedures within the EU: under the
European Coal and Steel Convention, the High Authority “was obligated to pursue
infringements [… whereas] the Commission enjoys full discretion in this respect”783. In
comparison, the pre-litigation phase has therefore been softened and politicised. Article
258 TFEU only states that the Commission “may bring the matter before the Court”.
This evolution can also be explained in terms of governance: ‘soft’ ways of
implementation and management of compliance, even including “means to put pressure
on the Member States to comply with non-binding instruments, such as letters of
notice” in the context of the “emergence of non-binding auxiliary enforcement
procedures”, like preventive measures in the agricultural and fisheries policies784. The
EU institutional architecture is hybrid so that hybrid legal results should come as no
surprise as well as the influence of inter-governmental fora like the Council.
781 M. EVERSON: op. cit., pp. 315-340, at p. 320-321. 782 R. ADAM and A. TIZZANO: Manuale di Diritto dell’Unione Europea, Torino 2014, G. Giappichelli Ed., p. 37. 783 S. ANDERSEN: The enforcement of EU Law. The role of the European Commission, Oxford 2012, Oxford University Press, p. 131. 784 Ibíd., pp. 190 and 202.
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We detect abundant references to the Council Conclusions in the CSR initiatives
undertaken by the Commission (communications, recitals of the Directives), especially
the seminal European Councils at Lisbon (2000), Stockholm and Gothenburg (2001).
The EU intergovernmental nature is an undeniable part of its institutional DNA and it
should not be forgotten that the recourse to Council Conclusions “all’interno dell’iter
legislativo può determinare uno sviamento di procedura” 785 so that its role shall not be
neglected. The Council provided the necessary political impulse to initiate the European
CSR agenda when it invited (since it cannot oblige) the Commission to submit reports
and communications in the topic at hand. The Commission’s Green Paper of 2001 and,
more recently, its Renewed Strategy for CSR 2011-2014 are a response to this political
will. The Renewed EU Strategy for 2011-2014 recalled that “The Council and the
European Parliament have both called on the Commission to further develop its CSR
Policy” 786, expressly citing the Environment Council of 5 December 2008, the
Environment Council of 20 December 2010, the Foreign Affairs Council of 14 June
2010 and two EP resolutions of 2007 and 2011, the institutional legitimation of the
Commission to act despite being soft governance issues.
These initiatives have more institutional weight when they are backed-up by the
Council, which is also the main party in the CFSP and, accordingly, an indispensable
actor to impulse the external dimension of CSR. Beyond the stereotypes on inter-
institutional battles (that –at times– occur), there is a good amount of political
compromises and permissive cooperation, to take up and adapt the concept of
‘permissive consensus’ to which we alluded above. And even, “on several occasions,
the European Parliament has considered it useful to request, in the course of the EU
decision making process, the inclusion of explicit references to European Council
Conclusions in EU legislation to be adopted”787, with a clear intention to increase the
political weight of the initiatives at stake and indirectly recognising that many Council
Conclusions might be seen as political “mandates”788. We have referred to the EU
Strategic Framework and Action Plan on Human Rights and Democracy 2012-2014,
precisely adopted by the Council (Council Doc. 11855/12), even though it has no choice
785 R. ADAM and A. TIZZANO: Manuale…, op. cit., p. 181. 786 COM (2011) 681 Final, op. cit., p. 4. 787 F. EGGERMONT: The Changing Role of the European Council in the Institutional Framework of the European Union: Consequences for the European Integration Process, Cambridge 2012, Intersentia Ed., p. 354. 788 Ibíd., p. 360.
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but to precise, in a footnote, that “decisions on specific steps to implement this Action
Plan will be taken in accordance with the Treaties” and “does not affect the division of
competence between the EU and its Member States”. The first initiative fell on the
Commission’s Communication “Human Rights and Democracy at the heart of the EU
External Action –towards a more effective approach”, dated December 2011, which
mutated into the framework and action plan adopted by the Council in June 2012. In the
2015 spring, again the Commission and the High Representative for Foreign Affairs and
Security Policy took the initiative and issued a joint communication with the proposal of
a renewed Action Plan for the Period 2015-2019, calling on the Council to adopt it.
More rapidly that with the first action plan, only two months later, the Foreign Affairs
Council adopts it illustrating this inter-institutional permissive cooperation and, to some
extent, the bi-directionality of (soft) political mandates between the Commission and
the Council.
We shall make a final point on the Council. According to the EU’s own documentation,
apart from private actors, CSR also concerns public authorities. The success of
transparency requirements is one of its key-drivers so that the calls for more
transparency have been extended to the EU institutions. The Grand Chamber
consolidated the necessary openness and transparency of the Council vis-à-vis EU
citizens with respect to decision-making processes, defining it as an “overriding public
interest” clarifying the institutional work of the EU, based on the “democratic right of
European citizens to scrutinize the information which has formed the basis of a
legislative act, as referred to, in particular, in recitals 2 and 6 of the preamble to
Regulation No. 1049/2001”789. In a second paradigmatic case, the NGO Access Info
Europe challenged before the Court the decision of the Council to disclose the minutes
of negotiations without detailing Member States’ positions. In appeal, the First Chamber
upheld the General Court decision and dismissed the Council allegations on the
supposed sensitive nature of the documents requested that would justify an exception to
disclosure of information in virtue of art. 4(3) of Regulation 1049/2001. By rejecting
this argument, the ECJ understands that the exception needs to be assessed on a case-
by-case basis and was not sufficiently proved, therefore supporting the idea that the
effectiveness of the Council’s decision-making process was not under threat because of
789 Joined Cases C-39/05 P and C-52/05 P, Kingdom of Sweden and Maurizio Turco v. Council, Judgement of 1 July 2008, para. 67.
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transparency. The ECJ indirectly confirmed, as alleged by Access Info Europe, that “it
is precisely at the point when the procedure is initiated that maximum transparency is
vital: by the time that discussions have already been held and compromise positions
reached, transparency and public debate are no longer of any use at all”790. In sum, the
Council has not been unaffected to these new governance modes, pushed by a minority
of States led by Sweden that profited from the so-called permissive consensus, albeit
“the permissive atmosphere from which the pro-transparency coalition long derived its
power has declined”791.
The ECJ seems to have taken on the profile of a face-saving referent in this complex
institutional inter-play. It is true that the ECJ is not free from criticism either: once the
Charter was upgraded to same level of the Treaties, the Court as a “human rights
adjudicator” is limited to the application of EU Law and some argue that it lacks of a
solid and opened comparative approach to international human rights law792.
On the whole, it can be said that disappointments with regard to the Court’s role in
defending human rights are caused by the fact that public opinion and many academics
expect it to act as a constitutional court while it is an international tribunal, with its
obvious particularities. The roots of this misunderstanding are created expectations,
perhaps a desideratum, but not the Court’s clearly hybrid nature and characteristics. The
ECJ has even empowered National Courts to review the measures of State executives in
application of the Treaties: the off-cited Van Gend en Loos recognised under certain
criteria the eventual direct effect of some provisions of international agreements793. This
implicitly vested EU National Courts with complementary supervision powers with
respect to Member States and, to some extent, also the control of EU institutions
790 Case C-280/11 P, Council v. Access Info Europe, Judgement of 17 October 2013, para. 46. 791 M. ZBIGNIEW HILLEBRANDT, D. CURTIN and A. MEIJER: “Transparency in the EU Council of Ministers: An Institutionalist Analysis”, in European Law Review, Vol. 20 No. 1 (January 2014), pp. 1-20, at p. 17. Also interesting, in the preparation of Council of Ministers, the role of the COREPER, where permanent representatives face the difficulty of a “double loyalty”: towards their respective Member States and towards the EU because of their obligation to reach pre-agreements: J. LEWIS: “The Janus Face of Brussels: Socialization and Everyday Decision Making in the European Union”, in International Organisation, Monographic volume International Institutions and Socialisation in Europe, Vol. 59 No. 4 (Autumn 2005), pp. 937-971, p. 939. 792 G. De BÚRCA: “After the EU Charter of Fundamental Rights: The Court of Justice as a Human Rights Adjudicator?”, in Maastricht Journal of European and Comparative Law, Vol. 20 No. 2 (2013), pp. 168-185, p. 179 and ff. 793 In the “legal relationship between Member States and their subjects”, negative obligations provided in an international agreement produce “direct effects and creat[e] individual rights which national courts must protect”. Case 26/62, Van Gend en Loos v. Nederlandse Administratie der Belastingen, Judgement of 5 February 1963, p. 13.
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themselves: we could say that the same criteria laid down in Van Gend en Loos would
reasonably lead to the hypothesis that, in 2008, the “implicit threat of intervention”794 of
National Courts encouraged the Grand Chamber’s decision in Kadi795, overruling
nothing less than a UN Security Council Resolution (despite art. 103 of the UN Charter)
and its translation into a Council Regulation.
An institutional lesson can be drawn out for other international organisations on to what
extent the interaction between international tribunals and national courts can contribute
to control the legitimacy of the international organisation at stake when its international
tribunal might be weaker (or less willing) as to the supervision of the international
institutional itself. In any case, we have seen the ECJ’s transversal role in the area of
public procurement, in general terms dealing with soft law, with the indirect
(improvable) control of agencies, and with the Council’s transparency. This is how EU
institutions partially bypass their inherent traps in terms of “overlapping jurisdictions
resulting from layers and layers of agreements reached with a heavy emphasis on
balancing [… and] pompous and empty rhetoric”796.
The several peppered interventions of the ECJ encourage to describe it as a transversal
curative actor in the institutional building: some deficiencies would otherwise
dramatically reduce –if not annul– the institutional credibility of the EU in promoting
CSR, human rights and good governance. In the area of CSR, if at any time there are
unlawful results, there are good reasons to think that they can be avoided or annulled
thanks to the ECJ, even though their institutional origin might remain unaddressed.
Besides, the EU institutions may face legal and political responsibilities for contents and
decisions taken by multiple actors.
These institutional remarks confirm that the ECJ’s role has been positive in the overall.
Furthermore, in terms of policy transfers, “the transfer potential of the ECJ is
794 “There is reason to believe, for example, htat the pivotal Kadi judgement in 2008 was prompted by the concern that if the Grand Chamber did not review the EU policy, several N[ational] C[ourt]s would step in and do this”. E. BENVENISTI and G.W. DOWNS: “The Premises, Assumptions and Implications of Van Gend en Loos: Viewed from the Perspectives of Democracy and Legitimacy of International Institutions”, in European Journal of International Law, Vol. 25 No. 1 (2014), pp. 85-102, at p. 101. 795 Joint Cases C-402/05 P and C-415/05 P, Yassin Abdullah Kadi and Al Barakaat International Foundation v. Council of the European Union and Commission of the European Communities, Judgement of 3 September 2008. 796 A. ALESINA and R. PEROTTI : “The European Union: A Politically Incorrect View”, in The Journal of Economic Perspectives, Vol. 18 No. 4 (Autumn 2004), pp. 27-48, at p. 47.
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consistently [but erroneously] ignored”797. Precisely in the area of CSR, inter-
institutional policy transfers are particularly important and weave complex relational
networks: for example, from the US, the influence of the Dodd-Frank and Sarbanes-
Oaxley Acts plus the Alien Tort Statute. In other cases, some early concrete initiatives
that come from Member States have anticipated CSR aspects that were later
incorporated into the EU institutional agenda –sometimes traumatically, through the
ECJ judicial intervention–, resulting in potential policy transfers to other Member
States. It goes without saying the crucial transfers from other international
organisations: as for the UNGPs, the EU uses an external source and asks Member
States to implement it ‘in coordination’ via national action plans in a sort of “facilitated
unilateralism”798, a particular form of policy transfer that allows, in the meanwhile, the
influence of EU institutions. Additionally, the interaction between EU institutions
themselves: the Parliament, the Council and the Commission have all been supportive
of CSR and, setting aside their diversity, they have differently shaped the
materialisation of CSR. The EU also has transferred CSR issues to other regional
organisations, as seen in chapter III. At the end of the chain, when EU based TNCs
adopt Codes of Conduct there is a potential “private transplant of EU Law”799: a private
bottom-to-bottom policy transfer or “legal transplant” given that private of Codes of
Conduct can have an influence to extend EU law beyond the EU.
Lastly, detractors say the EU’s institutional role in promoting human rights is built on
shifting sand. We might agree on the fact that “Europe is a laboratory of a postmodern
multiplicity of human rights protection and their interaction”800. CSR confirms it. This
has to be seen against the institutional narrative on the EU, particularly insistent in its
alleged teleological and ever progressing character. The crisis since 2008 might have
broken this fairy tale promoted by EU institutions801, or perhaps its constitutive
elements have been exhausted. The EU’s global institutional role is also a question of
the self-image of authorised story-tellers, to use human rights as the cornerstone of the
797 S. BULMER and S. PADGETT: “Policy Transfer in the European Union: An Institutionalist Perspective”, in British Journal of Political Science, Vol. 35 No. 1 (January 2005), pp. 103-126, at p. 104. 798 Ibíd., pp. 110-111. 799 T. FERRANDO: “Codes of Conduct as Private Legal Transplant: The Case of European Extractive MNEs”, in European Law Journal, Vol 19 No. 6 (November 2013), pp. 799-821, at p. 809. 800 A. PAULUS: “Human Rights Protection in a European Network of Courts”, in American Society of International Law –Proceedings of the Annual Meeting, Vol. 107(April 2013), pp. 174-182, p. 174. 801 A. MORENO JUSTE: “El fin del relato europeo. La crisis del proceso de integración y su impacto sobre las narrativas europeas”, in Revista de Derecho Comunitario Europeo, Vol. 17 No. 45 (May-August 2013), pp. 607-630, at pp. 612-614.
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EU’s “civilian power”802, using Duchêne’s terminology to distinguish it from Nye’s
categories of hard and soft power.
Be that as it may, despite the official narrative that proposes a step-by-step story in
which the economic cooperation has led to wider political goals, finally adding a strong
human rights commitment, Gráinne de Búrca has instead demonstrated that human
rights were actually an essential, explicit and strong part of the European project back in
1951-1954, as shown by the drafting process of the (failed) treaty for the European
Political Community (EPC) and its surprisingly advanced provisions compared to the
current human rights system in the EU. In this sense, human rights did not emerge, but
re-emerged, during the European integration project (since the 1970’s and 1980’s, again
with the active role of the ECJ), despite the fact that “Member States continue to resist
submitting themselves to human rights monitoring by the EU, and the active assertion
of human rights protection as a goal of EU foreign policy remains in sharp contrast to
the unwillingness to declare human rights protection to be a general goal or a cross-
cutting objective of internal EU policies”803. The internal dimension of CSR might be a
“third-way” to fill the gap created by this reluctance of Member States, precisely as a
“cross-cutting objective of internal EU policies”, especially to the extent this
institutional weaknesses can affect the “global normative leadership”804 of the EU.
According to Jürgen Habermas, “in the light of a constitutionalisation of International
Law”, the EU architecture should look forward to a more symmetric repartition of
powers of initiative and legal capacity of its different institutions to overcome “the
peculiar floating position of the Commission” and the “anomaly” of the Council805.
Obviously, the insider’s view is always more aware of imperfections; notwithstanding
improvable institutional aspects, the EU is still a quite successful experiment. Outsiders
observe the actual “global regulatory power” of the EU and its international influence
when it promotes the CSR agenda. Outsiders have no qualms about saying that “the EU
802 Unfortunately, we consider that the EU’s role in the ex-Yugoslavia in the 1990’s and, more recently, in Ukraine, both affected by German interests –insufficiently studied- in relation to the relative failure to reproduce a hegemonic power within the EU, might all together put in question this theory of the EU’s “civilian power” or role. For a critical summary of Duchêne’s idea, see: V. BACHMANN and J.D. SIDAWAY: “ Zivilmacht Europa: A Critical Geopolitics of the European Union as a Global Power”, op. cit., at p. 97 ff. 803 G. DE BURCA: “The Road Not Taken: The European Union as a Global Human Rights Actor”, in The American Journal of International Law, Vol. 105 No. 4 (October 2011), pp. 649-693, at p. 681. 804 Ibíd., p. 690. 805 J. HABERMAS: “The Crisis of the European Union in the Light of a Constitutionalisation of International Law” in European Journal of International Law, Vol. 23 No. 2 (2012), pp. 335-348, at p. 345 (citations).
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is already a superpower and, importantly, a superpower of a meaningful kind”806, albeit
being aware of all these institutional determinants.
4.3.2. Substantive contributions and the post-2015 agenda
After these institutional remarks, it is necessary to finish with some general conclusions
on the substantive aspects of Europe’s role, without repeating the concrete
implementation of CSR in the EU, studied in Chapter III. When undoubtedly well-
intended authoritative voices raise their hands in horror, sophisticatedly scandalised,
because CSR and soft law appears to them too far away from their dreamed human
rights regime, we should just wonder if, given all these institutional and legal
determinants, it is reasonable to think that the EU could really act otherwise or go much
further. It is commonplace to blame EU institutions for the lack of political will of
Member States. Moreover, according to the definition of CSR proposed in the general
part of this research, it becomes clear that it should not be aimed at replacing the
available International Human Rights Law, but at complementing it with predominantly
ex-ante and horizontal strategies to coinvolve companies. In fact, the first substantive
originality of the EU is that ex-ante strategies and horizontal legal effects are not
unexplored territory, marking the European contribution to global CSR.
Indeed, ex-ante strategies are not new in the EU’s “market philosophy”, differing from
other positions within the WTO system: “la filosofia di mercato europea è basata qui
sui principi dello sviluppo sostenibile e della prevenzione dei rischi, oltre che del più
generale principio di precauzione. La vigilanza sui prodotti è, almeno in parte,
esercitata ex ante (prima cioè dell’immissione sul mercato) e non solo ex post”807.
Nor is horizontality a novel problem in the EU. It is perhaps less obvious in human
rights issues, since they are seen as binding only on States: however, that is to say it has
to “permeate all areas of law” and, therefore, there is a State duty to prevent –and
806 A. BRADFORD: “The Brussels Effect”, in Northwestern University Law Review, Vol. 107 No. 1 (2012), pp. 1-67, at p.67. 807 L. S. ROSSI: “Verso una nuova etica del Commercio Internazionale?”, in L. S. ROSSI (a cura di): Commercio Internazionale sostenibile? WTO e Unione Europea, Bologna 2003, Il Mulino Ed., pp. 11-25, at p. 23.
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remediate– third-party violations808. It is a well-established doctrine that the State’s
failure to respect human rights can be determined by act or omission809, so that the
failure to prosecute an abuse by a private actor can constitute a violation of the main
human rights treaties (at least in terms of effective judicial remedies). In particular, the
principle of non-discrimination has always been the spearhead of a progressive and
indirect horizontalization of human rights obligations, including this principle in legal
relationships inter privatos810. When the ECJ has balanced the right of free movement
of goods and the freedom of speech and assembly (in cases of demonstrations), it has
ruled the duty of the State to restrict fundamental freedoms, under certain conditions, to
guarantee the fundamental rights of other private actors, “weighing the protected
interests of the involved private parties”811. If restrictions to the freedom of speech and
assembly are possible to ensure the free movement of goods, why the ECJ might find
unlawful partial restrictions to the freedom of companies to make effective the State’s
duty to respect human rights with regard to other private actors, provided they are
proportional and justified? The way CSR is materialising in the EU seems close to this
808 Building on German Constitutional Jurisprudence, it could be described as an “effect of radiation”: E. J. LOHSE: “Fundamental Freedoms and Private Actors –Towards an ‘Indirect Horizontal Effect’”, in European Public Law, Vol. 13 No. 1 (2007), pp. 159-190, at pp. 169-170. 809 The ECHR has ruled in cases of environmental complaints that the failure to act is also punishable under the Convention. In some cases a right enshrined in the Convention that “does not merely compel the State to abstain from such interference: in addition to this primarily negative undertaking, there may be positive obligations” –Case of Guerra and Others v. Italy, Judgment of 19 February 1998 (Grand Chamber), Application No. 14967/89, para. 58. This doctrine was confirmed by linking environmental cases to article 8 on private and family life, to the extent environmental damages can be assessed under this light, since the seminal Case of López Ostra v. Spain, Judgment of 9 December 1994, Application No. 16798/90, para. 51, 52 and 58. 810 In particularly evocative terms, the ECJ has said that the prohibition of discrimination might be extended “likewise to agreements and rules which do not emanate from public authorities” (in that case the reason was nationality, all the more poignant within the EU). Case 36/74, Walrave and Koch v. Assoc. Union Cycliste Internationale et al., Judgment of 12 December 1974, para. 21. 811 The idea would be to extrapolate some of the conclusions of the ECJ in Commission v. France and Schmidberger as proposed by E. J. LOHSE (Ibíd., p. 183): “For the ‘infringer’ this not change anything: in order to fulfil its duty of protection the State has to restrict his/her freedom. However, states in the Community legal order are likewise bound not to infringe fundamental rights. It has been actively discussed if the state could take into account those rights of the private ‘infringer’, as in Commission v. France the ECJ did not mention a possible fundamental right of the farmers to demonstrate which would probably have existed, although violent demonstrations do not enjoy much protection. However, Schmidberger established respect for the other private party’s fundamental rights as an acceptable justification for a ‘failure to act’ which resulted in a ‘pyramidal’ construction. In the particular case, the action of the state could be justified by the protection of freedom of expression and assembly, fundamental rights […] When weighing the protected interests of the involved private parties, freedom of assembly prevailed because there was a legitimate goal of the demonstration and the main aim was not to hinder trade (which would be an illegal exercise of a fundamental right) but to express an opinion. Applied to Commission v. France, a test of balance between the ‘freedom of speech’ of the farmers and the free movement of goods would have pointed in the opposite direction as here the main goal was the obstruction of trade and the fundamental right was exercised in a violent way not in accordance with national laws. Obviously, this reasoning is not restricted to the above-mentioned fundamental rights but applies to all fundamental rights on the Community level”.
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balance between the protected freedoms of companies and the State’s duty to ensure
human rights, also inter privatos by virtue of the ‘permeation’ or ‘radiation’ of human
rights law to all spheres, resulting in a pyramidal construction between States and
private parties. Yet it is not a consolidated development, there are sound reasons to
consider, at least, “indirect horizontal effects” in the EU.
In general terms and compared to other organisations, the EU reacted slowly to the
emergence of CSR in the international agenda, but rapidly catched up and has even
overcome the blocking dichotomy between pure voluntarism advocates and hard-law
enthusiasts. As with the EU Charter of Fundamental Rights, in the case of CSR, the EU
is inspired by external sources to finally go well beyond those international influences
in terms of precision and detail812. CSR ‘cake’ now looks harder and more toasted on
the outside, and still soft and juicy inside: the substantive implementation of CSR shows
an evolution in which the EU has reconciled the aforementioned dichotomy creating
harder frameworks with soft contents. Before 2009, the first initiatives pointed to a very
different result and the Commission was widely criticised for being more inclined to the
so-called ‘business-case’ and merely voluntary formulas. The crisis since 2008 might
have played a role in the re-balancing of CSR policies –perhaps switching on the oven
instead of cooking a cold cake. Nobody knows what the result will be; it is an on-going
process during which an increasing consensus among Member States might change the
scenario –the temperature, in our metaphor.
It is early to know to what extent we face a change of scenery towards ever harder
initiatives. The relative hardening of CSR within the EU is consistent with two
international developments that seem to go in the same direction. Firstly, in 2000 the
OECD Council made it obligatory to establish National Contact Points for the States
adhered to the Guidelines on MNEs, even though we have seen that NCPs widely differ
as for their powers and structure. Secondly, the 2003 UN Norms on the Responsibility of
Transnational Corporations and Other Business Enterprises with regard to human
rights obligations also reflect a harder approach: “the [UN] Norms are the closest thing
to an example of a hard regulatory approach to CSR that could be envisaged in
812 “La Carta, fonte interna all’ordinamento dell’UE, è molto più precisa e dettagliata di quanto siano le fonti ‘esterne’ cui la protezione dell’Unione ha sin qui dichiarato di ispirarsi”. L. S. ROSSI: “La Carta dei Diritti Fondamentali dell’UE: una sfida costituzionale”, in L. S. ROSSI (a cura di): La protezione dei diritti fondamentali. Carta dei diritti UE e standards internazionali (XV Convegno della Società Italiana di Dirittto Internazionale –Bologna 10-11 Giugno 2010), Napoli 2011, Ed. Scientifica, pp. 19-22, at p. 19.
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traditional international law. They do not attempt to reconcile hard regulation and
voluntarism” –in this light, their difficult enforcement through litigation is also a typical
problem under traditional international law813.
The EU is halfway and reflects this wider tendency towards hardening some aspects of
CSR, while reconciling these positions. The EU’s substantive contribution is, also, this
mixed and pragmatic approach adopted so far. A proof is the sustained effort to
maintain a multi-stakeholder informative and promotion agenda even after the
discouraging failure of the first EMS Forum, all of this combined with a parallel –
unexpected– impact on EU Law (already commented upon in Chapter III) and its
transfer to the institutional-international arena.
In this respect, it must be emphasised that the substantive contribution of the EU further
has a notable international effect. If the “de-pillarization caused […] a fuzzier
demarcation between the external aspects of the AFSJ and other external
competences”814, we think it has happened the same with other policy areas after
Lisbon, to a degree that the internal dimension of CSR makes little sense without its
external one, as it can be the case with almost any other policy.
This is the result, from a substantive point of view, of an increasingly coordinated
reading of diverse treaty provisions, in particular: articles 1 to 4, 9 to 12 and 13 of the
TEU, jointly with articles 11, 21 and 205 of the TFEU. Besides, to jointly read all these
articles might lead to clearer “substantive obligations, which must be followed up on in
a different and more comprehensive way than they are today”815. The partial
implementation of the CSR agenda has shown the incipient possibilities of jointly
reading these treaty provisions: “EU Law then has the potential of taking the lead
globally and turning the trend of short-term growth mania into a reflective, long-term
sustainable development”816.
813 S. MacLEOD: “Reconciling Regulatory Approaches to Corporate Social Responsibility: The European Union, OECD and United Nations Compared”, in European Public Law, Vol. 13 No. 4 (2007), pp. 671-702, at p. 694. 814 L. S. ROSSI: “From EU Pillar to Area: The Impact of the Lisbon Treaty on the External Dimension of Freedom Security and Justice”, in C. FLAESCH-MOUGIN and L. S. ROSSI (Dirs.): La dimension extérieurse de l’Espace de Liberté, de Sécurité et de Justice de l’Union Européenne après le Traité de Lisbonne, Bruxelles 2013, Éd. Bruylant, pp. 5-21, at p. 8. 815 B. SJAFJELL: “Quo Vadis Europe? The significance of sustainable development as objective, principle ad rule of EU Law”, in C. M. BAILLET (Ed.): Non-State Actors, Soft Law and Protective Regimes. From the Margins, Cambridge 2012, Cambridge University Press, pp. 254-280, at p. 267. 816 Ibíd., p. 280.
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With its imperfections, articles 9 to 12 should be more widely used to scrutinise almost
any action of the EU, as they are a significant “European lesson” for international
organisations, as a viable and realistic supranational democracy instead of idealistically
extrapolating XIXth -Century nationalist criteria on democracy817. By the way, it should
not go unnoticed the unique European experience with regard to the penetrating
international subjectivity of individuals, utterly important in human rights: very early
the ECJ confirmed that “the [then] Community constitutes a new legal order of
international law for the benefit of which the states have limited their sovereign rights,
albeit within limited fields, and the subjects of which comprise not only Member States
but also their nationals”818. Equality and sovereignty, essential concepts in the theory of
international organisations, have suffered many changes going through the European
filter: from merely formal equality, we have walked towards a more substantive equality
by sharing sovereignty819, mainly guided by human rights concerns820.
Finally, it appears throughout this research that European initiatives have followed a
rather specific and concrete style after 2009, reflecting this “substantive” vocation of the
EU. At the same time that general principles were settled, there has been a parallel
bottom-up process in which dispersed new CSR provisions in technicalities finally
become a true cross-cutting CSR strategy –whilst other international organisations
usually work the other way round (from the general to the particular, as we have seen).
817 “The experience of the European Union, where democratic legitimation is derived from direct elections by equal citizens (via the European Parliament) and indirectly through the peoples of the Member States (via the European Council and Council), exemplifies that different bases for legitimation can not only coexist, but can be mutually supportive. The democratic legitimation of supra- and international institutions needs to be conceived as composite and ‘multilevel’”. A. Von BOGDANDY: “The European Lesson for International Democracy: the Significance of Articles 9-12 EU Treaty for International Organisations”, in European Journal of International Law, Vol. 23 No. 2 (2012), pp. 315-334, at p. 325. 818 Case 26/62, Van Gend en Loos v. Nederlandse Administratie der Belastingen, Judgement of 5 February 1963, p. 12. 819 L.S. ROSSI: Inaugural speech on the occasion of the International Congress on the Principle of Equality in EU Law, University of Bologna, 19 May 2015 –not published. 820 It is impossible to guess the final result of this process, as very early indicated E.H. Carr (1892-1982) in his seminal Twenty Years’ Crisis, first published in 1939 (with corrections in the second edition of 1945). When he wonders on the survival of nations as units of power, he answers (Spanish translation): “Marx tuvo razón al percibir que el individuo aislado no podía ser la unidad efectiva en la lucha por los derechos humanos y la igualdad humana. Pero se equivocó al suponer que la unidad última era la clase social y al infravalorar las cualidades de cohesión y unificación de la unidad nacional. […] Hoy no hay por qué cometer el error, que cometió Marx con la clase social, de tratar a la nación como la unidad-grupo definitiva de la sociedad humana”. E.H. CARR: La crisis de los veinte años (1919-1939). Una Introducción al Estudio de las Relaciones Internacionales, Madrid 2004, Ed. Catarata, pp. 306-308.
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We have to acknowledge, in this sense, that the EU has the merit of a detailed approach
able to show some very technical –but not less important– problems, as illustrated with
the crucial issue of access to justice. The EU has essentially followed the work of other
international organisations, but now has a potential leadership to define concrete
solutions for these practical problems thanks to its previous and unique experience.
Unfortunately, since the 2008 crisis began, unemployment has risen and labour is more
and more considered as a cost instead of a factor of production so that a good part of the
progress made has been reversed or simply left aside. The problems have been studied
in detail by the EU institutions, with –not less important–contributions made by
Member States. The path is opened; we shall not get left behind.
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CONCLUSIONS
I. Corporate Social Responsibility at a global level
1. Against ontological and ideological incompatibilities
‘Business and Human Rights’ studies would not exist if there was an ontological
incompatibility between globalisation and fundamental rights. Starting out from this
premise, the social legitimation of globalisation trends will depend on the definition of
Corporate Social Responsibility and on its capacity to balance States’ power, societal
expectations and global capitalism. The success of CSR will, in turn, depend on how we
build the very concept of CSR, within which we must acknowledge the necessary
centrality of human rights and the interplay between both hard- and soft-law
instruments. There is also a need for a consensual, institutional, interdisciplinary,
integrative, and human rights approach to this subject, in order to systematise the
current initiatives and infer the eventual trends for the future. This is the way to
overcome any apparently ontological incompatibility between business and human
rights, between hard and soft law, between subjects and objects of IL, between
ideologies on the market economy and any other pair of related concepts that,
otherwise, would block any reasonable study of CSR.
2. Definition and characteristics of CSR
The practice of International Organisations at a global level and of the European Union
at a regional level supports the definition of CSR that we have proposed: CSR is a
complementary strategy to increase the horizontal effects of current internationally
recognised human rights, mixing hard and soft-law instruments, in their particular
interaction with the activities of all kind of business enterprises, with a predominantly
preventive vocation. Our definition comprises all possible nuances and can be clarified
sensu contrario: CSR is not corporate philanthropy or charity; it is not only about
voluntary initiatives since it includes baseline legal requirements; it is not only
preventive though being aimed at completing IHRL with mostly ex ante strategies with
274
regard to which traditional IHRL suffers from important gaps; it is not a substitute or
alternative for treaty-based obligations, but a complement; it does not place direct duties
on private actors for the moment, but develops and specifies indirect horizontal effects
upon them, through the national implementation of existing International Law. In this
line, we deduce three characteristic elements of CSR: 1) the close connection with the
type of business and the inherent impact of its concrete operations; 2) a sustainability
criteria focused on long-term effects rather than incidental responses; 3) and a clear
purpose to respect human rights, which is its legal foundation.
3. CSR and customary international law
The interrelation observed between hard law and soft law hides a deeper dialectic
between treaty law and the customary path in the development of CSR, which do not
seem irreconcilable options. However, this work does not advocate for the creation of a
new treaty or binding instrument on business and human rights, because we observe a
historical inertia against new international treaties, especially after the 11 September
2001 attacks. Suffice it to mention the General Assembly’s failure to finally adopt the
ILC projects on the responsibility of States or on diplomatic protection. The ‘treaty
curse’ adds arguments against an eventual treaty: its slow negotiation and risks of
compromise solutions of minimum contents, and its slower ratification (distinguishing
between signatures and ratifications). We shall add the possibility of hindering
reservations; the time lag before the entry into force; the need of monitoring
mechanisms for treaty implementation; and that the home countries of most TNCs did
not support the creation of the UN Working Group to negotiate a binding instrument,
which is not a good omen. Instead, the already initiated customary path shows the
opportunity to progress more rapidly (there is not a time requirement) in the
construction of a wider consensus. Of course, we do not idealise the customary way as it
can be obscure in its contents and States might be ambiguous in explaining their
practice not to risk future obligations. This is why our preference for the customary path
should not be interpreted at the expense of existing treaty law, which has proved to be
indispensable to frame and discipline the current CSR initiatives. But these initiatives
have not reached a sufficient degree of normative maturity to act otherwise –in other
words, we put forward the potential of the customary path seen as a light and drizzling
275
rain over time (if adequately channelled). The multiplication of national action plans
contribute to move forward down the customary path.
4. Soft law and the development of CSR
CSR is an emerging normative system with subcategories, which vary in legal value,
specificity and scope. Many of its components are soft-law instruments, within the
framework of pre-existing human rights law. In this connection, soft law has three
advantages that mark its contribution to the development of CSR: 1) it allows the
introduction of new debates and International Law issues, such as the international
subjectivity and eventual duties of private actors, at the same time it facilitates
agreements leaving room to differences and particularities, therefore encouraging the
progressive building of a global consensus; 2) it allows the interpretation of existing
instruments in order to specify their implications and fill gaps with regard to the
complex interaction between human rights and TNCs’ activities; 3) and in the long run,
it is a useful tool to generate customary practices among States and IOs to further
regulate the human rights’ impact of TNCs. In light of this, CSR has a potential per se,
beyond its gradual ‘hardening’. In terms of regulatory processes, instead of creating ex
novo instruments that only respond to our ideals in a deductive manner deprived of
practical experience, CSR has evolved into a case-based, empiric and cumulative
regulatory process.
5. The role of International Organisations
International Organisations have a prominent role to play in this regulatory process.
First of all, IOs heavily influence the progressive development of International Law and
can promote the effective implementation of existing human rights instruments
alongside their progressive interpretation to gradually cover business practices and
responsibilities. Secondly, IOs greatly contribute to expand and accelerate States’
practice in the same direction; in fact, the priority of the UN Working Group that
followed Ruggie’s mandate is to foster national action plans on CSR. This is a far from
negligible effort because the generalisation and universalisation of national actions
plans is absolutely crucial for the normative consolidation of CSR at an international
276
level, in customary terms –even regardless of their effectiveness (this can come later).
IOs also help ensure a greater degree of institutional coordination and substantive
consistency of national action plans.
6. Incipient crystallisation of CSR
For the time being, two principles are the most advanced in crystallising at the
customary level or, at least, enjoy a very promising degree of international legal
recognition. We are referring first of all to the ever-growing acknowledgement of
private correlative duties upon corporate actors in terms of human rights, as an indirect
permeation of international human rights law. Even though we still lack of sufficient
details on its contents, indirect horizontal obligations between private actors to protect
human rights have gained much credit within the international society, as proclaimed by
many soft instruments and, also, a good amount of authoritative interpretations of treaty
bodies, arbitral mechanisms and even some national Courts that all point in the same
direction. The second principle in its way to crystallise is the transversal character of
human rights within general international law. This should not be understood in
hierarchical terms but in line with the relational character of IL. Almost all IOs have
accepted to incorporate human rights’ concerns into their daily activities regardless of
their founding priorities, even economic organisations that were traditionally less active
in this regard like the World Bank or the World Trade Organisation. At the States’ level,
it starts to be commonplace to bear in mind human rights concerns when dealing with
apparently unrelated issues and negotiations, far more often and in unprecedented
manners in relation to trade and investments –though still improvable. The recognition
of some kind of private correlative duties upon TNCs, indirect emanation of IHRL, and
human rights’ institutional mainstreaming are –in the practice of both States and IOs–
the most normatively consolidated aspects of CSR: they may obviously await further
specification, but they already seem irreversible.
7. The problematic of trade and investments
As for human rights’ mainstreaming, the practice surveyed shows that the ICSID
tribunals and the WTO dispute settlement bodies have had no prejudices or reluctance
277
to acknowledge the relational character of International Law and, indirectly, eventual
human rights concerns. Related human rights issues have been addressed on a number
of occasions. Their reasoning is twofold: the integration within general international law
and, secondly, the eventual place of human rights. However, States generally fail to
identify and benefit from the current opportunity niches for human rights’ protection
within trade and investment disputes. States’ failure in this area is generally due to the
inadequacy of hierarchical claims and maximalist wishes in favour of human rights over
other international obligations, so that arbitral tribunals end up with their back against
the wall, instead of reasonably arguing the relational character of International Law and
the need to counterbalance concurring international obligations, which would be the
strategy with greater chances to succeed. On several other occasions, States’ failure is
caused –in summary– by a lack of good faith and coordination in the way they regularly
cope with these concurring international obligations, unduly alleging human rights’
protection to hide internal problematics and inconsistencies. In fact, most disputes
surveyed show that the first phase of the test is passed and arbitral bodies accept the
relevance of human rights in some cases. It is at a second stage when most States fail:
when it comes to demonstrate that the measures adopted were necessary (the impact in
relation to the public good pursued), proportional (the least-inconsistent option
reasonably available was chosen), and non-discriminatory (in comparison to other
States, investors or internal legislation). It is therefore the responsibility of States to
adequately make use of the existing possibilities, both institutional and substantive: to
‘grease’ those open windows and adequately open them.
8. The UN leadership and policy transfers.
Whether positivists like it or not, soft law is not a new phenomenon within International
Law. Nor is it strange to EU Law, in its interplay with proper norms in many law-fields.
The UN, FAO, the WHO, the OECD, the ILO, the World Bank Group, and private
organisations (like the ISO) have all worked on CSR and issued guidelines,
recommendations, declarations, etc. Moreover, as time passed and the UN had released
its main contributions (the three-level framework and the UNGPs), all the above-
mentioned organisations have expressly made an effort of coordination to gradually put
their own standards in line with the UN ones, citing each other’s instruments. IOs at a
278
global level already acknowledge and even promote a high level of policy transfers
between them in the area of CSR, which permeates States’ policies and some private-led
initiatives. The proliferation of national action plans are a good example.
II. Corporate Social Responsibility in the European Union
9. Particularities of CSR in the EU
The above-mentioned International Organisations have determined the first European
initiatives, but it is very important to recall the United States influence (the Alien Tort
Statute, the Sarbanes-Oxley Act and Dodd-Frank Act). In this context, it has been made
clear the European Union’s receptivity to welcome the development of IL and CSR,
perhaps a bit slowly at the beginning, but in the end including it among its working
priorities for the new millennium, reinterpreting its contents with substantive
improvements and, finally, re-upload CSR at a global level while exercising an
important influence –having hardened some of its aspects. If International Organisations
at a global level have worked from the general to the particular, the European Union has
worked the other way round, from technicalities to more general principles. This
explains why the European Union has had a ‘CSR before CSR’, unlabelled and implicit,
especially to regulate consumer’s protection and environmental issues with an initial
focus ad intra. The EU has needed some time to accept the emergence of CSR as such
and to catch up; after 2009, it can be said that the EU became a key player. In this
evolution, the EU quite rapidly understood the external dimension of CSR and the
importance to resituate this concept within international human rights law, being also a
human rights appeal ad extra. In general terms, we have deduced that CSR in the EU
has set itself up as a mainstreaming governance tool or crosscutting transversal policy
rather than a classic and separate policy per se. Finally, apart from alleviating the
tensions caused by globalisation, CSR in the EU has an additional and utterly important
role: it navigates between a market-oriented and a rights-based integration project, thus
contributing to their precarious equilibrium.
279
10. Grey zones
However, it must be noted that the EU has not always been the torchbearer of CSR, as
seen at an early stage: for example, in Commission v. France (Case C-225/98) the
Commission contested a French public contract based on social requirements; or when
the then European Communities threatened to bring a WTO-complaint against some US
public-procurement restrictions affecting Myanmar’s repressive regime in 1997
(WT/D88/3). The EU is not a monolithic reality and it has been checked that, at times,
some States like France or the Netherlands, were ahead of EU institutions in the
development of some CSR-aspects, when the ECJ has become a face-saving actor. Even
later, with an apparently consolidated CSR agenda, we have found grey zones that show
the institutional complexity of the EU: in several occasions, the Council has rejected the
more daring aspects of some CSR regulatory proposals of the Commission and, at
times, even the European Parliament slows down negotiations just to artificially boost
its own importance without really making substantive corrections to proposals. For
example, the regulation of supply chains in highly sensitive trade of minerals like tin,
tantalum and tungsten, their ores, and gold; it is true that it took three years for the
Commission to draft a proposal, but the Parliament unrealistically wants to exaggerate
its contents (good enough), while it postpones delivering results and putting pressure on
the Council, which is actually the less enthusiastic EU institution in this subject.
11. Legal spill-overs
The 2008’ financial and economic crisis might have contributed to this evolution,
encouraging the hardening of some aspects. Indeed, there are important CSR “legal
spill-overs”. CSR has grown well beyond the initial borders of mere voluntariness, as it
becomes evident in the following hard norms: Directive 2013/34/EU has established
compulsory reporting for the extractive industry on payments to any government over €
100,000 within a financial year, in money or in kind; Directive 2014/95/EU has made
mandatory non-financial reporting for companies over 500 employees specifying
concrete and explicit human rights concerns, including corporate governance reports
and details on companies’ governing bodies; Directives 2014/24/EU and 214/25/EU
have incorporated and consolidated obligatory CSR requirements into public
procurement regulation in all sectors; and Regulation 1286/2014 has further increased
280
the protection of small shareholders and retail investors against aggressive practices in
the financial sector. The recentness of these initiatives makes it impossible to analyse
the level of national implementation, which is probably an interesting study to be made
in the near future in continuation of this research.
12. Access to justice
This research has analysed access to justice for human rights’ victims of TNCs with a
view to liberating this debate from ideological overtones, even though we take a stance
to conform to Dante’s famous warning: “the hottest place in hell will be reserved for
those who, in times of great moral crisis, have chosen to stay neutral”. First of all, we
advocate for civil proceedings instead of criminal law procedures, not only because of
its pecuniary aspect (essential in the conflict between human rights’ protection and
business interests), but also to avoid a highly risky overreliance and overdependence on
public prosecutors’ role. In our view, the problem of access to justice should be
reframed in terms of extraterritorial adjudicative jurisdiction and extra-contractual
civil responsibilities. The EU rules on jurisdiction lack of an admissibility criterion on
‘related actions’ of companies, built upon the contents of the litigious, to make EU-
based TNCs accountable for their activities in third countries (through subsidiaries or
otherwise), as a sufficient jurisdictional link regardless of other factors (nationality of
victims, etc.). Despite the absence of such admissibility criterion, the EU may take over
precisely when the US Alien Tort Statute is at a low ebb.
In practice, obviating idealistic stances that we have rejected due to the absence of
political will to undertake revolutionary normative innovations, our functional approach
has demonstrated for instance that complex corporate structures and veils can be pierced
on the basis of experience gained so far in the area of competition law and taxation law,
both at an international and a European level. The leading British and Dutch case-law
has shown that, against the doctrine of forum non conveniens, a certain forum
necessitatis can emerge in the EU to avoid intolerable denials of justice or eventually
irreconcilable judgements, according to art. 47 of the European Charter of Human
Rights and art. 6 of the European Convention for Human Rights. In this line, it seems
more or less feasible to further explore art. 7 of Reg. 864/2007: it certainly refers to
environmental damages (always in advance in comparison to other human rights), but it
281
could be extended to human rights violations in more general terms. Indeed, art. 7 of
Rome II Regulation establishes a link with the ‘place giving rise to the damage’, which
might open a window to vindicate the jurisdiction of a European court since concrete
damages can occur outside the EU, but the decisions leading to them might have been
made in European headquarters, if this can be proved. Besides, in the seminal Owusu v.
Jackson (Case C-281-02), the ECJ has ruled that art. 2 of Reg. No. 44/2001 also
regulates relationships with the Courts of non-Contracting States and that it can be read
jointly with art. 6(1): EU national courts have some room for manoeuvre in determining
under what circumstances ‘reasons of efficiency and justice’ would justify exercising its
jurisdiction, thus validating joint hearings of cases affecting subsidiaries and parent
companies and bypassing this way other jurisdictional obstacles. The European
Parliament has proposed changes to improve these limited possibilities, while the
Commission encourages the adoption 1980 Hague Convention. Importantly enough, the
main European contribution in this subject has consisted of discreetly preserving the
margin of appreciation of States when it comes to interpret and make use of the limited
flexibility under the Brussels Convention (Reg. 44/2001) and Rome II (Regulation
864/2007). It is up to European States to go down this road, timidly advanced by some
EU national courts.
13. National policies in the EU
EU member-States have worked reactively rather than proactively, many times making
the mistake of designing crisis-motivated and internally-oriented CSR policies, instead
of assuming its global dimension in terms of human rights and development, as
promoted by IOs at a global level and by the EU at a regional level. For the moment 24
European countries have adhered to the OECD Guidelines on MNEs, accordingly
establishing their respective National Contact Points, of discussable benefits. Many EU
member-States have approved National Action Plans on CSR, but only five States
specifically address ‘business and human rights’, which is perhaps caused by some
hesitancy to intensify the human rights language within CSR, despite the international
agreement in tying CSR to human rights. In any case, the presence of NAPs is only a
small part of the CSR-performance of States and we should also look at other
regulations, starting with the prompt transposition of recent Directives in the area of
282
corporate governance, public procurement, environment and consumer’s protection. We
concluded that the Commission should not promote two different national action plans
(on CSR and a separate one on ‘business and human rights’), given that it generates an
undesirable conceptual confusion: the best policy option is a single and precise action
plan, if possible approved by the Parliament or at the level of the Council of Ministers,
in which States should recognise the centrality of human rights within CSR, also
coherently with the action plans promoted by the UN.
Besides, instead of creating new institutions for the NCPs and other CSR-organs, we
rather defend that national human rights institutions should have an utterly important
role in developing and monitoring CSR. National human rights institutions, being
official but to a certain point functionally independent from governments, are a good
option to host non-judicial grievance and mediation mechanisms on business and human
rights –without excluding proper access to justice. Finally, NHRIs could also foster
social awareness and generate public CSR-certificates for products and companies,
ideally in coordination with new CSR-certificates at the EU level, making sure that they
remain as independent as possible from both governmental and corporate influences. It
is unlikely to be a top-down process: CSR-certificates created in Brussels will be hardly
acceptable for France, Germany or the United Kingdom, in relation to their respective
multinational corporations. It is more likely to be a bottom-up process in which each
State (ideally through its national human rights institution) generates a CSR certificate
that somehow penetrates into EU law after some time. In any case, the most important
point is to avoid the proliferation of for-sale private CSR-certificates.
14. Some easily improvable aspects
CSR is developing at a good speed in the EU, but there are some improvable or, at
times, forgotten aspects that it is worth recalling now because most of them might be
easily corrected. The institutional promotion of CSR moves between punitive and
persuasive initiatives, between hard and soft law, being all necessary. At times, a more
punitive approach can be interesting: the Commission could put in place a blacklist of
poor performing companies. A complementary and more persuasive way is to work on a
public European CSR-certificate with a human rights-based approach, before the
appearance of for-sale and private certification schemes. The Commission is wrong to
283
assert that two national action plans are necessary; a single NAP on CSR and human
rights is enough, if adequately designed. At the same time, close attention should be
paid to how States finally implement the incipient legal spill-overs of CSR –States may
communicate policies and pieces of legislation that in reality do not correspond to the
EU’s requirements, even though it is early to make an assessment on that. Finally, it
must be noted that new bureaucratising bodies are probably a diversionary manoeuvre
that hides concrete goals and deadlines; we already have in the EU national human
rights institutions that can be tasked with CSR.
On the international front, the EU sometimes lament over the fact that WTO dispute
bodies rule against European standards on phytosanitary products, public procurement
and a variety of safety requirements that third States contest as unlawful restrictions on
trade. A comprehensive EU strategy on international standards is urgent. Especially in
relation to the SPS Agreement, TBT Agreement and GATT itself, the WTO
increasingly refers to guidelines and standards created by other international
organisations; if the EU does not find safe certain hormones, for example, the EU must
realise that it can indirectly influence trade rules on safety by putting more pressure on
those other standard-setting organisations (mainly, the WHO, FAO and ISO) to align
themselves with the EU’s views on certain products, provided that the EU is not acting
in a protectionist manner or defending spurious interests, and bearing in mind that the
EU is not “the navel of the earth”.
The effectiveness of the European contribution to global CSR also depends on how the
EU standardises human rights clauses in trade and investment agreements; the EU
should adopt a general modus operandi rather than a case by case proceeding to
negotiate these treaties –of course, leaving some room for certain cautions and
particularities. There is a lot of pending work to put in order investment agreements,
since the Treaty of Lisbon granted the EU exclusive trade competencies and over
foreign direct investments (but not all investments). In sum, despite improvable aspects
and the long way to go, it starts to be reckless and highly risky for companies to ignore
or neglect this emerging normative scenario.
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CDSE vs. The Republic of Costa Rica, Final Award of 17 February 2000, Case No. ARB/96/1.
METALCLAD CORPORATION vs The United Mexican States, Award of 30 August 2000, Case No. ARB(AF)/97/1.
Borders Timbers Limited et al. vs. The Republic of Zimbabwe, Procedural Order No. 2 of 26 June 2012, Case No. ARB/10/25.
Suez, Sociedad General de Aguas de Barcelona SA and Vivendi Universal SA vs. The Argentine Republic, Decision on liability of 30 July 2010, Case No. ARB/03/19.
SAUR International S.A. vs. Argentine Republic, Decision on Jurisdiction and Liability of 6 June 2012, Case No. ARB/04/4.
Técnicas Medioambientales Tecmed SA vs. Mexico, Award of 29 May 2003, Case No. ARB(AF)/00/2.
UNCITRAL
S.D. MYERS Inc. vs. Government of Canada, Partial Award of 13 November 2000.
310
WTO Panels and Appellate Body
United States – Standards for Reformulated and Conventional Gasoline, Report of the Appellate Body, 29 April 1996, WTO Doc. WT/DS2/AB/R.
Japan – Taxes on Alcoholic Beverages, Report of the Appellate Body, 4 October 1996, WTO Doc. WT/DS11/AB/R.
United States – Import Prohibition of certain Shrimps and Shrimp Products, Report of the Appellate Body, 12 October 1998, WTO Doc. WT/DS58/AB/R.
GATT (Panel): Thailand – Restrictions on Importation of And Internal Taxes on Cigarettes, Report of the Panel, 7 November 1990, Doc. DS10/R – 37S/200.
GATT (Panel): Conciliation. United States – Prohibition of imports of tuna and tuna products from Canada, Report of the Panel, 22 February 1982, Doc. L/5198 – 29S/91.
AB: Korea – Measures affecting imports of fresh, chilled and frozen beef, Report of the Appellate Body, 11 December 2000, WTO Doc. WT/DS169/AB/R.
European Communities – Measures affecting asbestos and asbestos-containing products, Report of the Panel, 18 September 2000, WTO Doc. WT/DS135/R.
EC – Measures concerning meat and meat products (Hormones), Report of the Appellate Body, 16 January 1998, WTO Doc. WT/DS48/AB/R.
United States – Measures affecting the cross-border supply of gambling and betting services, Report of the Appellate Body, 7 April 2005, WTO Doc. WT/DS285/AB/R.
Canada – Patent Protection of Pharmaceutical Products, Report of the Panel, 17 March 2000, WTO Doc. WT/DS114/R
European Communities –Conditions for the Granting of Tariff Preferences to Developing Countries. Report of the Appellate Body, 7 April 2004, Doc. WT/DS246/AB/R.
European Court of Human Rights
Lautsi and Other vs. Italy, Judgement of 18 March 2011 (Grand Chamber), Application No.
30814/06.
Sud Fondi Srl and Others v. Italy, Judgement of 20 January 2009, Application No. 75909/01.
Sacilor-Lormines v. France, Judgement of 9 November 2006, Application No. 65411/01.
Agrokompleks v. Ukraine, Judgement on merits of 6 October 2011, Application No. 23465/03.
Capital Bank AD v. Bulgaria, Judgement of 24 November 2005, Application No. 49429/99.
Regent Company v. Ukraine, Judgement of 3 April 2008, Application No.773/03.
311
Västberga Taxi Aktiebolag and Vulic v. Sweden, Judgement of 23 July 2002, Application
No.36985/97.
Centro Europa Srl and Di Stefano v. Italy, Judgement of 7 June 2012 (Grand Chamber),
Application No. 38433/09.
Aon Conseil et Courtage S.A. and Christian de Clarens S.A. v. France, Judgement of 25 January
2007, Application No. 70160/01.
S.A. Dangeville v. France, Judgement of 16 April 2002, Application No. 36677/97.
Buffalo Srl in liquidation v. Italy, Judgement of 03 April 2003, Application No. 38746/03.
Eko-Elda Avee v. Greece, Judgement of 09 March 2006, Application No. 10162/02.
Stran Greek Refineries and Stratis Andreadis v. Greece, Judgement of 9 December 1994,
Application No. 13427/87.
Verlagsgruppe News GmbH v. Austria (No. 1 and 2), Judgement of 14 December 2006,
Application No. 10520/02.
Axel Springer AG v. Germany, Judgement of 7 February 2012 (Grand Chamber), Application
No. 39954/08.
Financial Times Ltd. And Others v. the United Kingdom, Judgement of 15 December 2009,
Application No. 821/03.
Sanoma Uitgevers B.V. v. The Netherlands, Judgement of 14 September 2010 (Grand
Chamber), Application No. 38224/03.
MGN Limited v. the United Kingdom, Judgement of 18 January 2011, Application No.
39401/04.
Glas Nadezhda EOOD and Anatoliy Elenkov v. Bulgaria, Judgement of 11 October 2007,
Application No. 14134/02.
André and Another v. France, Judgement of 24 July 2008, Application No. 18/603/03.
Case of OAO Neftyanaya Kompaniya Yukos v. Russia, Judgement on Just Satisfaction of 31 July
2014, Application No. 14902/04.
Case of OAO Neftyanaya Kompaniya Yukos v. Russia, Judgement on merits of 20 September
2011, Application No. 14902/04.
312
Guerra and Others v. Italy, Judgment of 19 February 1998 (Grand Chamber), Application No.
14967/89.
López Ostra v. Spain, Judgment of 9 December 1994, Application No. 16798/90.
Court of Justice of the European Union (or former European Communities) Case C-225/98, Commission v. France, Judgement of 26 September 2000.
Case 31/87, Gebroeders Beentjes BV, Judgement of 20 September 1988.
Case 513/99, Concordia Bus Finland, Judgement of 17 September 2002.
Case C-448/01, EVN AG, Wienstrom GmbH, Judgement of 4 December 2003.
Case C-322/88, Grimaldi v. Fonds des maladies professionnelles, Judgement of 13 December 1989.
Case C-410/09 Polska Telefonia Cifrowa, Judgement of 12 May 2011.
Joined Cases C- 189-02 P, C-202/02 P, C-205/02 P to C-208/02 P and C-213/02 P, Dansk Rorindustri et al. v. Commission, Judgement of 28 June 2005 (Grand Chamber).
Case T-496/11, United Kingdom of Great Britain and Northern Ireland v. European Central Bank, Judgement of 4 March 2015.
Case 68/86, United Kingdom of Great Britain and Northern Ireland v. the Council, Judgement of 23 February 1988.
Case C-185/07, Allianz SpA and GeneraliAssicurazioni Generali SpA v. West Tankers Inc., Judgment of 10 February 2009 (Grand Chamber).
Case C-536/13, Gazprom OAO v. Lietuvos Respublika, Judgment of 13 May 2015 (Grand Chamber).
Case C-281/02, Owusu v. Jackson, Judgment of 1 March 2005 (Grand Chamber).
Case C-98/06, Freeport plc v. Olle Arnoldsson, Judgment of 11 October 2007.
Case C-645/11, Land Berlin v. Ellen Mirjam Sapir et al., Judgment of 11 April 2013.
Case C-45/13, Andreas Klainz v. Pantherwerke AG, Judgment of 16 January 2014.
Steel and Morris v. The United Kingdom, Case 68416/01, 15 February 2005.
Joined Cases 281, 283 to 285 and 287/85, Germany, France, Netherlands, Denmark and United Kingdom v. Commission, Judgement of 9 July 1987.
Joined Cases C-39/05 P and C-52/05 P, Kingdom of Sweden and Maurizio Turco v. Council, Judgement of 1 July 2008.
313
Case C-280/11 P, Council v. Access Info Europe, Judgement of 17 October 2013.
Case 26/62, Van Gend en Loos v. Nederlandse Administratie der Belastingen, Judgement of 5 February 1963.
Joint Cases C-402/05 P and C-415/05 P, Yassin Abdullah Kadi and Al Barakaat International Foundation v. Council of the European Union and Commission of the European Communities, Judgement of 3 September 2008.
Case 36/74, Walrave and Koch v. Assoc. Union Cycliste Internationale et al., Judgment of 12
December 1974.
NATIONAL JURISPRUDENCE
(In order of appearance)
United Kingdom
No judgement – Out-of-court Settlement: Sithole v. Thor Chemicals Holding Ltd, [2000] A2/2000/2894 (AC).
No judgement – Out-of-court settlement: Ngcobo v Thor Chemicals Holdings Ltd & Desmond Cowley, 1997.
ENGLISH HIGH COURT: Yao Essaie Motto and Ors v Trafigura Ltd., [2009] EWHC 1246 (QB).
HIGH COURT OF JUSTICE (Queen’s Bench Division, Senior Courts Costs Office): Yao Essaie MOTTO & ORS v. Trafigura Ltd and Trafigura Beheer BV, Judgment of 15 February 2011, EWHC 90201.
HIGH COURT OF JUSTICE (Queen’s Bench Division): The Bodo Community and Others v. The Shell Petroleum Development Company of Nigeria Limited, Judgment of 20 June 2014, EWHC 1973 (TCC).
HOUSE OF LORDS: Spiliada Maritime Corporation v. Cansulex Ltd., Judgment of 19 November 1986.
HOUSE OF LORDS: Lubbe and Others and Cape Plc. And Related Appeals [2000] UKHL 41, Judgment of 20 July 2000 (opinions of the Lords of Appeal for Judgment).
HOUSE OF LORDS: Connelly (A.P.) v. RTZ Corporation Plc and Others, Judgment of 24 July 1997.
HIGH COURT OF JUSTICE (Queen’s Bench Division): Vava and Others v. Anglo American South Africa Limited –Appeal, Judgment of 24 July 2013, EWHC 2131(QB).
314
HIGH COURT OF JUSTICE (Court of Appeal, Queen’s Bench Division): David Brian Chandler v Cape Plc (Appelant), Judgment of 25 April 2012, EWCA Civ 525.
HIGH COURT OF JUSTICE (Queen’s Bench Division): Guerrero and Others v. Monterrico Metals Plc and Rio Blanco Copper SA, Judgment of 16 October 2009, EWHC 2475 (QB).
The Netherlands
RECHTBANK AMSTERDAM (Amsterdam Court): Trafigura Beheer B.V., Case No. 13/846003-06, Judgment of 23/07/2010.
GERECHTSHOF AMSTERDAM (Amsterdam Court of Appeal): Trafigura Beheer B.V –Appeal, Case No. 23/003334-10, Judgment of 23 December 2011.
RECHTBANK DEN HAAG (Court of The Hague): Plaintiffs 1 and 2 (Oruma) and Vereniging Milieudefendie v. Royal Dutch Shell and Shell Petroleum Development Company of Nigeria Ltd, Judgment of 30 December 2009, Case No. 330891/HA ZA 09-579.
RECHTBANK DEN HAAG (District Court of the Hague): Friday Alfred AKPAN (Ikot Ada Udo) and Vereniging Milieudefensie v. Royal Dutch Shell Plc and Shell Petroleum Company of Nigeria Ltd, Judgment of 30 January 2013, Case No. C/09/337050/HA ZA 09-1580.
RECHTBANK DEN HAAG (District Court of The Hague): Fidelis Ayoro OGURU and Alali EFANGA (Oruma) v. Royal Dutch Shell Plc and Shell Petroleum Development Company of Nigeria Ltd, Judgment of 30 January 2013, Case No. C/09/330891/HA ZA 09-0579.
France
COUR DE CASSATION (Chambre sociale): Case No. 1184, 10 May 2006 : https://www.courdecassation.fr/jurisprudence_2/chambre_sociale_576/arr_ecirc_8861.html
United States of America
SUPREME COURT: Miles v. Illinois Central R. Co., 315 US 698 (1942), Judgment of 30
March 1942. Available at: https://supreme.justia.com/cases/federal/us/315/698/case.html
COURT OF APPEALS (2nd Circuit): Dolly M.E. FILARTICA and Joel Filartiga v. Americo
Norberto PEÑA-IRALA, No. 191, Docket 79-6090, Judgement of 30 June 1980. Full text
accessed at http://openjurist.org/630/f2d/876.
SUPREME COURT: Sosa v. ALVAREZ MACHAIN et al., No. 03-339, Judgement of 29 June
2004.
315
COURT OF APPEALS (2nd Circuit): Wiwa and Others v. Royal Dutch Petroleum, Docket Nos. 99-7223 and 9-7245, Judgement of 14 September 2000 (on admissibility). [Out-of-Court Settlement]. Accessed at http://caselaw.findlaw.com/us-2nd-circuit/1401109.html.
COURT OF APPEALS (2nd Circuit): Kiobel and Others v. Royal Dutch Petroleum, Docket No. 06-4800-cv, 06-4876-cv, Judgement of 17 September 2010.
SUPREME COURT: Kiobel and Others v. Royal Dutch Petroleum, Docket No. 10-1491, Judgement of 17 April 2013.
COURT OF APPEALS (9th Circuit): Doe v. UNOCAL, Docket Nos. 00-56603, 00-57197, 00-
56628, 00-57195, 13 April 2005 [Out-of-court settlement].
STATES’ PRACTICE (1)
LEGISLATION
United States
CONGRESS OF THE USA (111th): Dodd-Frank Wall Street Reform and Consumer Protection Act, 5 January 2010, Sections 1504 and 1505, H.R. 4173.
Denmark
Act No. 1403 (27 December 2008) amending the Act on Financial Statements (Lov om aendring af arsregnskabsloven).
Act No. 546 adopted by the Danish Parliament 18 Junes 2012 (establishing the Danish National Contact Point in accordance with the OECD Guidelines on MNEs)
France
Law No. 2010-788 of 12 July 2010 (“portant engagement national pour l’environnement”), Journal Officiel de la République Française, No. 0160 du 13 Juillet 2010, page 12905.
Conseil d’Etat Décret nº 2012-557 du 24 avril 212 relatif aux obligations de transparence des entreprises en matière sociale et environnementale, Journal Officiel de la République Française No. 0099 du 26 avril 2012, page 7439
Finland
Government Decree on the Committee on Corporate Social Responsibility, Helsinki, 4 December 2008.
316
STATES’ PRACTICE (2)
POLICIES
United Kingdom
GOVERNMENT OF THE UNITED KINGDOM OF GREAT BRITAIN AND NORTHERN IRELAND: Good Business. Implementing the UN Guiding Principles on Business and Human Rights, Presented to the Parliament by the Secretary of State for Foreign and Commonwealth Affairs by Command of Her Majesty, September 2013, Cm 8695.
The Netherlands
MINISTRY OF FOREIGN AFFAIRS: National Action Plan on Business and Human Rights, April 2014.
Denmark
DANISH GOVERNMENT: Danish National Action Plan. Implementing the UN Guiding Principles on Business and Human Rights, March 2014.
Finland
MINISTRY OF EMPLOYMENT AND THE ECONOMY –Labour and Trade Department: National Action Plan for the implementation of the UN Guiding Principles on Business and Human Rights, October 2014, Publication 46/2014.
Italy
Published Draft: “The foundations of the Italian Action Plan on the United Nations Guiding Principles on Business and Human Rights”, 2015.
317
PRACTICE OF INTERNATIONAL ORGANISATIONS
World Trade Organisation
GATT (1947): Decision on Differential and More Favourable Treatment, Reciprocity and Fuller Participation of Developing Countries, 28 November 1979, GATT Document L/4903.
Hong Kong Ministerial Conference: Ministerial Declaration, Doha Work Programme, Adopted on 18 December 2005, Hong Kong, WTO Doc. WT/MIN(05)/DEC.
Council for TRIPS: Paragraph 6 of the Ministerial Declaration on the TRIPS Agreement and Public Health, 24 June 2002, WTO Doc. IP/C/W/355.
General Council: Implementation of Paragraph 6 of the Doha Declaration on the TRIPS Agreement and Public Health, Decision of 2 September 2003, WTO Doc. WT/L/540.
World Bank Group
The latest revision of the Inspection Panel’s Operating Procedures date April 2014 and are available at: www.inspectionpanel.org
IFC/MIGA: CAO Operational Guidelines, Washington 2007, available at www.cao-ombudsman.org
IFC/MIGA: CAO Operational Guidelines, Washington 2013.
IFC: Policy on Environmental and Social Sustainability, Washington January 2012.
Organisation for Economic Development and Cooperation
Guidelines for Multinational Enterprises, Paris 2011, OECD Publishing.
Policy Framework for Investment User’s Toolkit, Paris 2011, OECD Publishing.
Model Convention with respect to taxes on income and on capital. Available at www.oecd.org
International Labour Organisation (UN Agency)
INTERNATIONAL INSTITUTE FOR LABOUR STUDIES / ILO: “Governance, International Law and Corporate Social Responsibility”, Research Series No. 116 (2008).
Tripartite Declaration on MNEs and Social Policy (1977)
Declaration on Fundamental Principles and Rights at Work (1998)
318
ILO: Tripartite Declaration of Principles Concerning Multinational Enterprises and Social Policy, revised version adopted by the Governing Body of the International Labour Office at its 295th Session, March 2006. (A non-revised 4th edition was issues 29 August 2014).
Food and Agricultural Organisation (UN Agency)
Voluntary Guidelines to support the progressive realization of the right to adequate food, 127th Session of FAO Council, November 2004
Voluntary Guidelines on the responsible governance of tenure of land, fisheries and forests, Committee on World Food Security, 38th Special Session, 11 May 2012
Principles for Responsible Investment in Agriculture and Food Systems, Committee on World Food Security, 41st Session, 15 October 2014
Code of Conduct for Responsible Fisheries
International Code of Conduct on the Distribution and Use of Pesticides
UN Conference on Trade and Development
World Investment Report. Transnational Corporations, Extractive Industries and Development, (2007)
G-7 (informal international institution)
G7: Leaders’ Declaration “Think Ahead. Act Together”, Summit at Schloss Elmau (Germany),
7-8 June 2015.
Inter-agency initiatives
OECD – ISO: Memorandum of Understanding between the OECD and ISO in the Area of Social Responsibility, 5 May 2008.
FAO – IFAD – UNCTAD – WB: Principles for Responsible Agricultural Investment that Respects Rights, Livelihoods and Resources (Extended version), 25 January 2010.
UNIDROIT – FAO – IFAD: Legal Guide on Contract Farming, Rome 2015.
OECD – FAO: DRAFT Guidance for Responsible Agricultural Supply Chains
319
OECD, WTO and WORLD BANK GROUP: Global Value Chains: Challenges, Opportunities and Implications for Policy, Report prepared for submission to the G-20 Trade Ministers Meeting, Sydney-Australia (19th July 2014).
Practice of the United Nations
(In order of appearance)
Security Council
Resolution (on Irak), 28 March 2003, UN Doc. S/RES/1472 (2003).
Resolution (on Sierra Leone), 4 December 2002, UN Doc. S/RES/1446 (2002).
Resolution “on the illicit trade in rough diamonds”, 28 January 2003, UN Doc. S/RES/1459
(2003).
General Assembly
Resolution “Transforming our World: the 2030 Agenda for Sustainable Development”, 25
September 2015, UN Doc. A/RES/70/1.
United Nations Millennium Declaration, Resolution adopted on 8th September 2000 (8th plenary
meeting), New-York, 18th September 2000, UN Doc. A/RES/55/2, and the Follow-up to the
outcome of the Millennium Summit, UN Doc. A/RES/55/162
Role of the United Nations in promoting development in the context of globalisation and
interdependence, Resolution of 20 December 2001, New-York 22 February 2001, UN Doc.
A/RES/55/212.
Alternative approaches and ways and mean within the United Nations system for improving the
effective enjoyment of human rights and fundamental freedoms, Resolution 32/130, 16
December 1977.
Towards global partnerships: a principle-based approach to enhanced cooperation between the
United Nations and all Relevant Stakeholders, Resolution of 7 February 2014, UN Doc.
A/RES/68/234.
Resolution adopted on the Human Rights Council, 15 March 2006, UN Doc. A/RES/60/251.
320
Treaty Bodies
ESCR Committee: Statement on Globalisation and Economic, Social and Cultural Rights, May
1998, UN-Doc. E/1999/22-E/C.12/1998/26.
ESCR Committee: General Comment No. 9, UN-Doc. E/C.12/1998/ (on the Domestic
Application of the Covenant)
ESCR Committee: General Comment No. 14, UN-Doc. E/C.12/2000/4 (on the right to health).
ESCR Committee: General Comment No. 13, UN-Doc. E/C.12/1999/10 (on the right to
education).
ESCR Committee: General Comment No. 3, UN-Doc. E/1991/23 (on the nature of States’
obligations).
ESCR Committee: Statement “An evaluation of the obligation to take steps to ‘the maximum of
available resources’ under an Optional Protocol to the Covenant”, UN. Doc E/CN.12/2007/1, 10
May 2007.
ESCR Committee: General Comment No. 4 (on the right to adequate housing), UN-Doc.
E/1992/23.
ESCR Committee: General Comment No. 12 (on the right to adequate food), UN-Doc.
E/C.12/1999/5.
ESCR Committe: General Comment No. 15 (on the right to water and sanitation), UN-Doc.
E/C.12/2001/11
Special Procedures of the Human Rights Council (and former Commission)
“Realization of Economic, Social and Cultural Rights”, Report of Danilo Türk, Special
Rapporteur, UN Doc. E/CN.4/Sub.2/1991/17.
Resolution on Human rights and transnational corporations and other business enterprises, 20
April 2005, UN Doc. E/CN.4/RES/2005/69.
Norms on the Responsibilities of Transnational Corporations and Other Business Enterprises
with Regard to Human Rights, UN Doc. E/CN.4/Sub.2/2003/12/Rev.2.
321
Draft Resolution on Responsibilities of Transnational corporations and other business
enterprises with regard to human rights, 7 August 2003, UN Doc. E/CN.4/Sub.2/2003/L.8.
Resolution 2004/116 on the Responsibilities of transnational corporations and related business
enterprises with regard to human rights, 20 April 2004, UN Doc E/CN.4/2004/L.11/Add.7 p. 81
ff.
Interim Report of the SRSG on the issue of human rights and transnational corporations and
other business enterprises, 22 February 2006, UN Doc. E.CN.4/2006/97.
Report of the SRSG on the issue of human rights and transnational corporations and other
business enterprises, Addendum on Corporate responsibility under international law and issues
in extraterritorial regulation: summary of legal workshops, 15 February 2007, UN Doc.
A/HRC/4/35/Add.2.
Protect, Respect and Remedy: a Framework for Business and Human Rights, Report of the
SRSG on the issue of human rights and transnational corporations and other business
enterprises John Ruggie, UN Doc. A/HRC/8/5, 7 April 2008.
Guiding Principles on extreme poverty and human rights, by the Special Rapporteur on Extreme Poverty Ms. Magdalena Sepúlveda, UN-Doc A/HRC/21/39
Clarfying the Concepts of Sphere of Influence and Complicity, Report of the SRSG on the issue
of human rights and transnational corporations and other business enterprises John Ruggie, 15
May 2008, UN Doc. A/HRC/8/16.
Resolution on the mandate of the SRSG on the issue of human rights and transnational
corporations and other business enterprises, 18 June 2008, UN Doc A/HRC/8/7.
Report of the SRSG on the issue of human rights and transnational corporations and other
business enterprises John Ruggie, “Guiding Principles on Business and Human Rights:
Implementing the United Nations ‘Protect, Respect and Remedy’ Framework”, 21 March 2011,
UN Doc. A/HRC/17/31.
Resolution on Human Rights and transnational corporations and other business enterprises, 6
July 2011, UN Doc. A/HRC/RES/17/4.
Resolution on human rights and transnational corporations and other business enterprises, 15
July 2014, UN Doc. A/HRC/RES/26/22.
Report of the Working Group on the issue of human rights and transnational corporations and
other business enterprises, 5 August 2014, UN Doc. A/69/263.
322
Resolution on the elaboration of an international legally binding instrument on transnational
corporations and other business enterprises with respect to human rights, 14 July 2014, UN
Doc. A/HRC/RES/26/9.
Report of the Independent Expert on the promotion of a democratic and equitable international
order, 5 August 2015, UN Doc. A/70/285.
Report of the Independent Expert on the promotion of a democratic and equitable international
order Alfred-Maurice de Zayas, 14 July 2015, UN Doc. A/HRC/30/44.
International Law Commission
Fragmentation of International Law: Difficulties Arising From the Diversification and
Expansion of International Law, Report of the Study Group of the International Law
Commission, 13 April 2006, UN Doc. A/CN.4/L.682.
Report of the International Law Commission, Fifty-eighth session, New York 2006, UN Doc.
A/61/10, pp. 516-519, Annex E on Extraterritorial Jurisdiction.
Conferences and Declarations
Vienna Declaration and Program of Action, Part I, parr. 5, adopted by the (second) World Conference on human rights, Vienna, June 25th 1993, UN-Doc. A/CONF.157/24.
Tehran Declaration, Final Document of the World Conference on human rights, Tehran, May 13th 1968, UN-Doc. A/CONF.32/41.
Studies
The Millennium Development Goals Report 2015, New York 2015.
Office of the High Commissioner for Human Rights (UN Secretariat)
OHCHR: Frequently Asked Questions on Economic, Social and Cultural Rights, Fact Sheet No. 33, Geneva 2008, United Nations.
OHCHR: Frequently-asked questions on a human rights-based approach to development
cooperation, New York and Geneva 2006.
323
OHCHR: Economic, Social and Cultural Rights, handbook for National Human Rights Institutions, United Nations, New York and Geneva 2005.
OHCHR: Les droits de l’homme et les accords commerciaux internationaux. Utilisation des clauses d’exception générale pour la protection des droits de l’homme, New-York-Geneva 2005, Nations Unies.
Others
SECRETARY GENERAL: Appointment of Mr. John Gerald Ruggie, UN Doc. SG/A/943.
324
PRACTICE OF THE EUROPEAN UNION
(In order of appearance)
Commission: communications
COM (2001) 366 Final, 18 July 2001, Green Paper promoting a European framework for Corporate Social Responsibility.
COM (2002) 347 Final, 2 July 2002, Corporate Social Responsibility: a business contribution to sustainable development.
COM (2011) 671 Final, 25 October 2011: A Renewed EU Strategy 2011-14 for Corporate Social Responsibility.
COM (2000) 379 final –not published in the Official Journal, was approved by the European Council meeting at Nice (December 2000).
COM (2006) 136 final, Implementing the Partnership for Growth and Jobs: making Europe a Pole of Excellence on Corporate Social Responsibility, , 22 March 2006
COM (2010) 2020, 3 March 2010, Europe 2020. A strategy for smart, sustainable and inclusive growth,
Staff Working Document SWD (2015) 144 Final, 14 July 2015, Implementing the UN Guiding Principles on Business and Human Rights –State of Play.
COM (2013) 138 Final, 14 March 2013, on the application of the Unfair Commercial Practices Directive. Achieving a high level of consumer protection. Building Trust in the Internal Market.
COM (2012) 22 Final, 27 January 2012, Trade, Growth and Development. Tailoring trade and investment policy for those countries most in need.
COM (2014) 263, 13 May 2014, A Stronger Role of the Private Sector in Achieving Inclusive and Sustainable Growth in Developing Countries.
EUROPEAN COMMISSION and HIGH REPRESENTATIVE FOR FOREIGN AFFAIRS AND SECURITY POLICY: Joint Communication to the European Parliament and to the Council. Action Plan on Human Rights and Democracy (2015-2019). “Keeping Human Rights at the heart of the EU Agenda”. Brussels, 28 April 2015, JOIN (2015) 16 Final.
COM (2001) 428, 25 July 2001, European Governance. A white paper.
COM (2002) 278 FINAL, 5 June 2002, Action Plan: Simplifying and improving the regulatory environment.
325
Commission: legislative proposals
COM (2011) 684 Final, of 25 October 2011, Proposal for a Directive of the European Parliament and the Council on the annual financial statements, consolidated financial statements and related reports of certain types of undertakings.
COM (2013) 207 Final, 16 March 2013, Proposal for a Directive of the European Parliament of the Council amending Council Directives 78/660/EEC and 83/349/EEC as regards disclosure of non-financial and diversity information by certain large companies and groups.
COM(2012) 352 Final, 3rd July 2012, Proposal for a Regulation of the European Parliament and of the Council on key information documents for investment products.
COM(2014) 111 Final, 5 March 2014, Proposal for a Regulation of the European Parliament and of the Council setting up a Union system for supply chain due diligence self-regulation of responsible importers of tin, tantalum and tungsten, their ores, and gold originating in conflict-affected and high risk areas.
Staff Working Document: SWD(2014) 52 Final, Executive Summary of the Impact Assessment Accompanying the document “Proposal for a Regulation of the European Parliament and of the Council setting up a Union system for supply chain due diligence self-certification of responsible importers of tin, tantalum and tungsten, their ores, and gold originating in conflict-affected and high-risk areas.
JOIN(2014) 8 Final, 5 March 2014, Joint Communication to the European Parliament and the Council. Responsible sourcing of minerals originating in conflict-affected and high-risk areas. Towards an integrated EU approach.
Commission: studies and policy papers
Flash Eurobarometer 363. How Companies Influence our Society: Citizen’s View, Report, Brussels (April 2013), 134 pp.
Flash Eurobarometer 393. Discrimination in the EU in 2012, Report. Brussels (November 2012), 238 pp
An Analysis of Policy References made by large EU Companies to Internationally Recognised CSR Guidelines and Principles, Brussels (March 2013), 19 pp.
My Business and Human Rights. A guide to human rights for small and medium-sized enterprises, Brussels (March 2013), 28 pp.
A partial and fragile recovery. Annual report on European SME’s 2013/2014, Brussels (July 2014).
Corporate Social Responsibility. National Public Policies in the European Union, Compendium 2014, Brussels June 2014
Tips and Tricks for Advisors. Corporate Social Responsibility for Small and Medium-Sized Enterprises, Brussels 2013.
326
Oil and Gas Sector Guide on Implementing the UN Guiding Principles on Business and Human Rights, Brussels (June 2013).
Employment and Recruitment Agencies. Sector Guide on Implementing the UN Guiding Principles on Business and Human Rights, Brussels (June 2013)
ICT Sector Guide on Implementing the UN Guiding Principles on Business and Human Rights, Brussels (June 2013),
Council
Presidency Conclusions, Lisbon European Council, 23 and 24 March 2000.
Presidency Conclusions, Nice European Council, 7-10 December 2010, Annex 1 (Social Agenda).
Presidency Conclusions, Stockholm European Council, 23-24 March 2001.
Presidency Conclusions, Gothenburg European Council, 15-16 June 2001.
Council conclusions. EU’s approach to trade, growth and development in the next decade, 3154th Foreign Affairs Meeting, Brussels, 16 March 2012.
Council Conclusions. Increasing the impact of EU Development Policy: an Agenda for Change, Brussels, 14 May 2012, Council Doc. 9369/12.
EU Strategic Framework and Action Plan on Human Rights and Democracy, Luxembourg, 25 June 2012, Council Doc. 11855/12.
European Parliament
Jacques Delors, President of the Commission: Speech to the European Parliament on the occasion of the investiture debate of the new Commission, Strasbourg 10 February 1993, Official Journal of the European Communities, Supplement 1/93.
Resolution on EU standards for European enterprises operating in developing Countries: towards a European Code of Conduct, [A4-508/98], Official Journal of the Europen Communities, C 104, Part II, 14 April 1999, pp. 180-184.
Resolution on the Commission Green Paper on Promoting a European framework for Corporate Social Responsibility (COM(2001) 366 –c5-0161/2002-2002/2069(COS))
Report on the Communication from the Commission concerning Corporate Social Responsibility: A business contribution to Sustainable Development (COM(2002) 347 -2002/2261 INI), Final A5-0133/2003, 28 April 2003.
Report on corporate social responsibility: a new partnership (2006/2133 INI), Final A6-0471/2006, 22 December 2006.
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Report on corporate social responsibility in international trade agreements (2009/2201(INI)), EP reference A7-0317/2010, 11 November 2010.
Corporate Social Responsibility. Identifying what initiatives and instruments at EU level could enhance legal certainty in the field of corporate social responsibility, PE462.464, 2012.
Amendments adopted on the proposal for a regulation of the European Parliament and of the Council setting up a Union system for supply chain due diligence self-certification of responsible importer of tin, tantalum and tungsten, their ores, and gold originating in conflict-affected and high-risk areas, 20 May 2015, P8_TA-PROV(2015)0204.
Resolution on institutional and legal implications of the use of ‘soft law’ instruments, 2007/2028(INI) P6_TA (2007) 0366, OJEU C 187 E/, 24 July 2008, pp. 75-79.
EU Law
Council Directive 84/450/EEC, of 10 September 1984, relating to the approximation of the laws, regulations and administrative provisions of the Member States concerning misleading advertising, Official Journal of the European Communities L 250 Vol. 27 of 19 September 1984.
Directive 2003/51/EC, 18 June 2003, amending Directives 78/660/EEC, 83/349/EEC, 86/635/EEC and 91/674/EEC on the annual and consolidated accounts of certain types of companies, banks, and other financial institutions and insurance undertakings, Official Journal of the European Union L 178 of 17 July 2003, p. 0016-0022.
Directive 2013/36/EU of the European Parliament and the Council, 26 June 2013, on access to the activity of credit institutions and the prudential supervision of credit institutions and investment firms, amending Directive 2002/87/EC and repealing Directives 2006/48/EC and 2006/49/EC, Official Journal of the European Union L-176, pp. 338-436, 27 June 2013.
Directive 2013/34/EU of the European Parliament and the Council, 26 June 2013, on the annual financial statements, consolidated financial statements and related reports of certain types of undertakings, amending Directive 2006/43/EC of the European Parliament and of the Council and repealing Council Directives 78/660/EEC and 83/349/EEC, Official Journal of the European Union, 29 June 2013, L 182 pp. 19 ff.
Directive 2014/95/EU of the European Parliament and of the Council, 22 October 2014, amending Directive 2013/34/EU as regards disclosure of non-financial and diversity information by certain large undertakings and groups, Official Journal of the European Union, 15 November 2014, L 330 pp. 1 ff.
Regulation (EU) No. 1286/2014 of the European Parliament and of the Council, 26 November 2014, on key information documents for packaged retail and insurance-based investment products (PRIIPs), Official Journal of the European Union, L 352, pp. 1 ff.
Directive 2014/24/EU of the European Parliament and of the Council, 26 February 2014, on public procurement and repealing Directive 2004/18/EC, Official Journal of the European Union, 28 March 2014, L 94, pp. 65 ff.
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Directive 2014/25/EU of the European Parliament and of the Council, 26 February 2014, on procurement by entities operating in the water, energy, transport and postal services sectors and repealing Directive 2004/17/EC, Official Journal of the European Union, 28 March 2014, L 94, p. 243 ff.
COMMISSION Regulation (EC) No. 1126/2008 of 3 November 2008 adopting certain international accounting standards in accordance with Regulation (EC) No. 1606/2002 of the European Parliament and the Council, Official Journal of the European Union L 320/1 of 29 November 2008.
Council Directive 2003/123/EC of 22 December 2003 amending Directive 90/435/EEC on the common system of taxation applicable in the case of parent companies and subsidiaries of different Member States, Official Journal of the European Union L 007, 13 January 2004 p. 0041-0044.
Council Regulation (EC) No 44/2001 of 22 December 2000 on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters (Official Journal of the European Union L 012 , 16/01/2001 P. 0001 – 0023).
REGULATION (EC) No 864/2007 of the European Parliament and the Council, of 11 July 2007, on the law applicable to non-contractual obligations (Rome II), Official Journal of the European Union L-199/40 of 31/07/2007.
International Agreements
EUROPEAN COMMUNITY: “Agreement Establishing and Association between the European Community and its Member States, of the one part, and the Republic of Chile, of the other part. Final Act. Joint Declaration concerning Guidelines to Investors”, Official Journal of the European Communities, L. 352, 30 December 2002.
EU-ACP Group of States: Agreement amending for the second time the Partnership Agreement between the members of the African Caribbean and Pacific Group of States, of the one part, and the European Community and its Member States, of the other part, signed in Cotonou on 23 June 2000, as first amended in Luxembourg on 25 June 2005, Official Journal of the European Union L 287, 4 November 2010.
Other documents
EU-CELAC: Santiago Declaration, Santiago de Chile, 27 January 2013, [Council of the EU Doc. 5747/13].
EU-CELAC: Brussels Declaration, Brussels, 11 June 2015, (Council of the EU Doc. 9839/15).
European Parliament, Council and Commission: Interinstitutional Agreement on better law-making, OJ 2003, C 321/01.
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LIST OF INTERNATIONAL TREATIES
International Bank for Reconstruction and Development Articles of Agreement (1945)
Convention for the Protection of Human Rights and Fundamental Freedoms (1950)
Convention on the Settlement of Investment Disputes between States and Nationals of Other States (1966)
International Covenant on Civil and Political Rights (1966)
International Covenant on Economic, Social and Cultural Rights (1966)
Vienna Convention on the Law of Treaties (1969)
UNESCO Convention for the Protection of the World Cultural and Natural Heritage (1972)
Brussels Convention on Civil Liability for Oil Pollution Damage (1992)
OECD Convention on Combating Bribery of Foreign Public Officials in International Business Transactions (1997)
Kyoto Protocol to the UN Framework Convention on Climate Change (1997)
Protocol to the Basel Convention on Liability and Compensation for Damage Resulting from Transboundary Movements of Waste and Their Disposal (1999)
United Nations Convention Against Corruption (2003).
ILO Core Conventions:
Forced Labour Convention (No. 29 -1930)
Freedom of Association and Protection of the Rights to Organise Convention (No. 87 -1948)
Right to Organise and Collective Bargaining Convention (No. 98 -1949)
Equal Remuneration Convention (No. 100 -1951)
Abolition of Forced Labour Convention (No. 105 -1957)
Discrimination (Employment and Occupation) Convention (No. 111 -1958)
Minimum Age Convention (No. 138 -1973)
Worst Forms of Child Labour Convention (No. 182 -1999)
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WEBSITES USED
Official Websites (IOs and States’ practice)
European Union Law
http://eur-lex.europa.eu
European Commission’s site on CSR
http://ec.europa.eu/growth/industry/corporate-social-responsibility
Danish CSR Council
http://csrcouncil.dk/
Council of Europe
www.coe.int
European Court of Human Rights (Council of Europe)
www.echr.coe.int
United Nations Treaty Series
http://treaties.un.org
Office of the UN High Commissioner for Human Rights
http://www.ohchr.org
Basel Convention
www.basel.int
World Trade Organisation
www.wto.org
World Bank
www.worldbank.org
World Bank Inspection Panel
www.inspectionpanel.org
Compliance Advisor Ombudsman of the IFC (WB)
www.cao-ombudsman.org
OECD Guidelines on MNEs and NCPs
https://mneguidelines.oecd.org/ncps/
International Labour Organisation
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www.ilo.org
Food and Agricultural Organisation
www.fao.org
Holy See
http://www.vatican.va
Private initiatives and sites
International Organisation for Standardisation
www.iso.org
Global Reporting Initiative
www.globalreporting.org
UN Global Compact
www.unglobalcompact.org
www.globalcompactfoundation.org
Equator Principles
www.equator-principles.com
UN Principles on Responsible Investments
www.unpri.org
CSR Europe
www.csreurope.org
Other resources
Forbes List of Global 2000 Companies
http://www.forbes.com/global2000/list
Fortune “500 List”
http://fortune.com/fortune500
Business and Human Rights Resource Center
http://business-humanrights.org
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INDEX OF TABLES AND DIAGRAMS
Diagram No. 1
“The place of CSR in relation to the tensions of Globalisation”, p. 21.
Diagram No. 2
“Pyramid of Correlative Private Duties under IHRL”, p. 63.
Diagram No. 3
“Legal composition of CSR”, p. 74.
Table No. 1
“Characterising CSR: charity or human rights”, p. 68.
Table No. 2
“National Policies in the EU: Screening the Best Initiatives”, p. 201.
Table No. 3
“Taxonomy of Soft Law and CSR in the EU”, p. 213.
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